Starbucks refunds W76b in prepaid cards amid 'Tank Day' backlash

Starbucks refunded about 76 billion won ($56.1 million) in prepaid card balances over two weeks as it moved to contain the fallout from its "Tank Day" promotion controversy.

Data submitted to Kim Hyeong-yeon, a member of the National Assembly's Political Affairs Committee from the Rebuilding Korea Party, show that Starbucks Korea reimbursed customers roughly 76 billion won in prepaid card balances from June 1 to June 14. The amount represents 17.8 percent of the 427.6 billion won in prepaid balances the company held at the end of last year.

The controversy began when Starbucks Korea ran a tumbler promotion called "Tank Day" on May 18, the anniversary of the May 18 pro-democracy uprising. Critics online argued the name mocked both the uprising and the 1987 torture and death of democracy activist Park Jong-cheol. As the backlash grew, Starbucks Korea halted the event immediately and issued an apology.

The company then temporarily relaxed its prepaid card refund policy to allow customers to reclaim their balances. Under Starbucks' standard terms, customers must use at least 60 percent of their most recent top-up before they can receive a refund on the remaining balance. For two weeks, Starbucks waived that condition entirely.

The controversy weighed on the company's earnings. Second-quarter sales fell 48.5 billion won, or 6.1 percent year on year, to 747.3 billion won. Operating profit swung to a loss of 18.4 billion won from a profit of 40.3 billion won in the same period a year earlier.

Kim called on the Korea Fair Trade Commission to consider requiring businesses to refund the full remaining balance of prepaid cards and mobile coupons when the fault lies with the operator. "This Starbucks case should serve as an opportunity for the KFTC to review a policy that mandates full refunds of prepaid balances when the business is responsible," Kim said.