Starbucks Corp. has stopped tacking on a surcharge for bags of coffee beans weighing less than a pound nationwide after a Massachusetts consumer-protection agency fined the company over the practice.
The Massachusetts Office of Consumer Affairs and Business Regulation found in August that the coffee giant wasn't notifying customers that it was adding a surcharge of about $1.50 for bags of beans weighing less than a pound.
That meant beans listed at $11.95 per pound ended up costing $7.45 for a half-pound — not $5.98, or half the price.
Under Massachusetts law, the company is required to either post signs in the store notifying customers of the exact surcharge, or have employees tell them of the additional charge. The extra cost was not reflected on the receipt, either.
"While Starbucks, and any retailer, is allowed to charge any additional fees it wants on a product, those additional fees have to be clearly and conspicuously disclosed to the consumer before the purchase," said Barbara Anthony, undersecretary of consumer affairs.
Anthony said she discovered the charge herself. Her office then sent inspectors to a sampling of Starbucks shops across the state and found that other stores also were assessing the surcharge. She even asked relatives and friends in other states to check Starbucks stores, and found the surcharge was applied across the nation.
The state fined the Seattle-based company $1,575 for overcharge violations at five stores.
"People have the right to know how much they are paying for a commodity," Anthony said.
Anthony does not know how long Starbucks has been assessing the service charge, but her office estimated that 75,000 Massachusetts customers alone have been overcharged.
Starbucks stopped adding the surcharge nationwide Nov. 7.
Starbucks spokesman Alan Hilowitz told The Boston Globe, which first reported the fine and policy change, that the company charged extra for half-pound bags to cover "the additional labor and packaging needed to accommodate those customers' unique request."
"We are pleased to be able to now offer our customers alternative sizes of whole bean coffee in all of our U.S. stores, free of any service charge," he said.
Customers were largely ignorant of the extra charge.
"They don't charge you a fee when you buy half a pound of bologna at the supermarket," said Frank Kidd, 67, outside a Boston Starbucks with his wife on Sunday.
Anthony points out that the agreement to drop the surcharge is not a legal settlement and said the state was in discussions with Starbucks on how to compensate customers.