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Tuesday, January 21, 2014

Starbucks prepaid a billion dollar baby

According to the Seattle Times, Starbucks Corp. had many happy returns in the fourth quarter of 2013. The Jan. 7, 2014, report said consumers in the United States and Canada loaded $1.3 billion onto Starbucks prepaid cards in the last three months of 2013. The load amount came from a memo Starbucks Chief Executive Officer Howard Schultz sent to Starbucks managers on January 6, the Seattle Times said.

Highlighting the growing influence of the prepaid product toward Starbucks' bottom line, Schultz reportedly stated that consumers loaded $610 million onto the cards during the 2013 holiday season alone. The Seattle Times quoted Schultz as saying its prepaid volume in the closing months of 2013 as "nothing less than extraordinary." Schultz went on to note that its gift card broke daily activations records on Dec. 19, Dec. 23 and Dec. 24, according to the article.

However, just a few days later, media reports surfaced that said Starbucks was storing in plain text the data of users who buy Starbucks products via the coffee company's popular mobile app for the Apple Inc. iPhone. By storing user names, email addresses and passwords in an unencrypted format, the data could have been easily hackable by fraudsters. Subsequent to the reports, Starbucks reassured customers that none of their personal information had been compromised. The international coffee retailer also said it had addressed the data security lapse. end of article

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