Grande deception?

Starbucks and the “free” college education for its workers: The reporting on Starbucks’ offer has gone beyond the headline—and if treated like ordinary advertising, that headline is misleading.  As it turns out, Starbucks will only pay in full for two years, not four; it’s negotiated a discount with ASU online for everyone.  And Starbucks does not pay up front.  Instead, the employee must go out of pocket, and get reimbursed only after sufficient credits have been completed.  I don’t think this meets the standard for “free” offers set forth by the FTC.  Although most of the Guide is directed at other situations, it’s pretty clear that material constraints on the “free” offer have to be disclosed, and the requirement that the employee pay up front is quite significant, financially.  This seems to me similar to the cases involving purported early tax refunds, which were instead tax refund anticipation loans, with very different potential economic consequences.  Calling them “rapid refunds” was false and misleading. 
Consider also that Starbucks is using this announcement to tout its own specialness and corporate social responsibility, as on The Daily Show.  So it’s commercial speech, certainly under Nike v. Kasky.  Just as dolphin-safe tuna is an intangible product attribute that convinces consumers to buy even though saving dolphins does nothing for them directly, so is “free” college tuition for employees, something Jon Stewart highlighted when he stated that because of Starbucks’ announcement he’d be buying from one of their stores.  Given all this, should Starbucks be worried about its PR moment turning into a moment in court?
This entry was posted in advertising, commercial speech, consumer protection, http://schemas.google.com/blogger/2008/kind#post. Bookmark the permalink.

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