If you’ve tried to get a refund from Chipotle for an order paid for by a gift card, but been told all you can get in return is a voucher that expires in 30-days, you might be eligible to join a new lawsuit against the restaurant giant.
The proposed class action lawsuit was filed by a woman accusing the company of unjustly enriching itself at the expense of gift card holders, who are denied refunds in place of the company’s meal vouchers. However, those vouchers have rules and limitations, including expiring after 30 days, not covering delivery fees, and only one can be used at a time, rendering them effectively “worthless,” the lawsuit says.
The scheme doesn’t just rip off gift card holders, the lawsuit claims, but breaks numerous U.S. laws designed to protect consumers.
Wisconsin resident Kelly Barton Terry filed the proposed class action lawsuit in California federal court alleging Chipotle Mexican Grill Inc. advertises that customers can use gift cards like cash, but refuses to refund gift card purchases.
"Chipotle's policy and practice of refusing to refund gift card purchases unjustly enriches Chipotle," she says in the lawsuit. "Chipotle consciously maintains such a policy for the purpose of realizing additional unearned profits without cost."
Those additional profits can add up to millions of dollars a year, she claims. Terry said in early 2023 she used a $100 gift card along with her credit card for a $106 dollar order, but the order was missing a number of items. When she tried to get the money refunded onto her gift card, she was told that wasn’t possible and she was issued meal vouchers that expired unused because of their limitations.
"It is facially implausible that Chipotle lacks the ability to credit gift cards, each of which is tracked with a unique card number, or otherwise issue a new gift card as Chipotle regularly delivers gift cards to customers with effectively zero cost,” Terry argues in the lawsuit.
The U.S. government has rules governing the use of gift cards to protect consumers from being taken for a ride by companies, and Terry argues in her lawsuit that Chipotle has designed its scheme to get around those.
The Federal Deposit Insurance Corporation says that through the Credit Card Accountability Responsibility and Disclosure Act, a gift card cannot expire until at least five years from the date it was activated, and there are general limitations on fees.
In addition, some states have separate laws that provide added protection in certain circumstances including offering cash for low balances and replacing stolen or lost cards. All in all those rules are there to make sure consumers are treated fairly and protected in their gift card use.
Terry’s proposed class action lawsuit isn’t the first time the Mexican fast food giant Chipotle has been hit with a lawsuit. It’s also not alone as a food and beverage provider facing scrutiny over its gift card policy. This year, consumers have taken Starbucks to court accusing the company of not refunding low balances on gift cards, Ars Technica reports.
Taco Bell settled a class action lawsuit over the same issue, having to pay consumers $85,500, NBC reported. “Businesses have a responsibility to honor their customers' gift cards, regardless of the amount,'' Los Angeles County District Attorney George Gascón said in a statement. “This settlement sends a clear message that companies like Taco Bell must abide by the law and treat their customers fairly.” .
Terry has asked the courts to certify the proposed class action lawsuit and she wants to represent Chipotle customers from across the country. She is alleging violations of California’s Unfair Competition Law, False Advertising Law, and Consumer Legal Remedies Act, as well as violations of the Wisconsin Consumer Act and Deceptive Trade Practice Act, and Breach of Contract, Unjust Enrichment and violations of the Federal Electronic Funds Transfer Act.
If successful with the lawsuit, Terry is seeking actual damages, statutory damages, punitive damages, attorney fees and injunctive relief.
The plaintiffs and proposed class are represented by Alex R. Straus of Milberg Coleman Brysob Phillips Grossman PLLC.
The proposed Chipotle gift card class action lawsuit is Terry et al v. Chipotle Mexican Grill Inc., Case No. 8:24-cv-00354, in the U.S. District Court for the Central District of California, Southern Division.
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