Sunday, August 14, 2011

Johnathan's Card: Start to Finish

If you have been following internet news this month, you have no doubt heard of the Johnathan's Card social experiment, in which Johnathan Stark offered a screenshot of his Starbucks Card mobile payment barcode for others to use in a "Take a Coffee, Give a Coffee" manner. The experiment lasted nearly a month with anonymous donations of over $9000 via reloading Johnathan's Starbucks Card. Thousands of people across the U.S. used the card to buy themselves Starbucks or to buy coffee or lunch at Starbucks for other less fortunate individuals. It was heralded as a revolutionary "pay-it-forward" social experiment and while I never used or reloaded it myself, I watched it unfold from the beginning and was planning to add support for Johnathan's Card to My Coffee Card for Android this weekend. I hoped to keep the experiment running with weekly donations of proceeds from My Coffee Card Pro to Johnathan's Card. However, Starbucks shut it down on Friday and I am writing this instead.

So why was it shut down? The answer is both simple and complex. The short answer is: it was being scammed by individuals transferring hundreds of dollars to their own personal Starbucks Cards. Read on for the much longer and more interesting answer.

When Johnathan's Card started, it was never created with the intention of the Take a Coffee, Give a Coffee revolution for which it has heralded. The card was loaded with a balance from Starks personal funds, in a social research experiment to see if users would do good by taking only what they need, or would they do bad and wipe the card out in a single transaction. It started well, and the card reached about half of its balance before someone emptied it and Johnathan reported that it was over.

Then, someone attempted to use the card and saw the balance was empty. In true Pay It Forward fashion, they loaded $10 of their own money on the card and tipped Johnathan off that the card could be reloaded anonymously via credit card or PayPal on the Starbucks website. Quickly the tune changed to the "Take a Coffee, Give a Coffee" or "Pay It Forward" experiment everyone is familiar with. It was heavily marketed and spread throughout the internet like a wildfire. A Twitter feed was set up to watch the progress and an API was available with up-to-the-minute information for more complex uses.

Starbucks involvement/Conspiracy Theory
Starks' company, Mobiquity, had a partners page on their website which listed Starbucks as one of their partners. When asked about Starbucks involvement in this or other projects, the page was quickly removed which started a conspiracy theory that Starbucks may have been involved in the whole thing from the start as a viral marketing campaign. This theory was denied by both Johnathan Stark and Starbucks. Stark says Starbucks had nothing to do with it. It was his own idea and experiment for his own project. Starbucks said that while the experiment is against their Starbucks Card terms of use, which disallows sharing of your registered Starbucks Card, they were excited to watch it from the sidelines.

The page listing Starbucks as a partner on the Mobiquity site was removed and Johnathan denounced naysayers in a steamed internet rant on Facebook and comments on various blogs. Starbucks involvement was again questioned when anonymous comments in support of the experiment showed up on blogs with the comments originating from a Starbucks owned IP address. Additionally, the partners page was removed from Googles cache, thus erasing history again, as was done at the turn of the experiment.

If Starbucks was not involved, their marketing department is probably wondering why they didn't think of it. Over the month long experiment/campaign, it significantly boosted mobile payments in-store, a huge focus for Starbucks right now; it introduced mobile payments to people that may have never used it otherwise, a huge focus of retailers, banks, smartphone manufactures and startups such as Mobiquity; and it brought hundreds of new or infrequent customers into the store. Involved or not, Starbucks was a huge beneficiary.

Personally, I could care less if Starbucks was involved or not. The experiment in its second incarnation, was used by thousands, sometimes for free Starbucks, sometimes for selfless acts and was loaded with over $9000 by anonymous donations. It was a successful social experiment, which many believed in (myself included), regardless of how it started. Note to Johnathan Stark and Mobiquity: Covering up facts and history is no way to make a point, just tell the truth.

The scandal
Johnathan's Card had a Twitter live stream which updated frequently, giving the balance throughout the day and alerting when the card was low or empty. There was also an API that provided up-to-the-minute balance information to third-party applications, such as the four Johnathan's Card apps for Android or a graph that shows the balance over the course of the experiment. Unfortunately, is was also used maliciously. A script was written and distributed which would watch the card balance via the API and play a song from your iTunes library when the balance is above a configured threshold. If you were on the Starbucks website, sitting at the ready, you could transfer those funds immediately to another card when the buzzer goes of, Instead of checking the available funds before getting in line, ordering and hoping there was still money on the card by the time you made it through the line, it became a battle of who could siphon the funds the fastest. Some were able to siphon hundreds of dollars worth.

Sam Odin, one of which was involved in siphoning funds, came forward saying he was able to transfer $625 onto two cards of his own. Enough to buy an iPad he claimed. Sam who is being called a modern day Robin Hood, didn't agree with the experiment, referring to it as "yuppies buying coffee for other yuppies". Sam stole money from the cards and listed the two cards on eBay, valued at $500 and $125. He will donate 100% of the winning auction price (minus selling fees) to the Save the Children foundation. The auction quickly reached over $3000 before being closed by eBay, apparently because you can not sell two cards together. He is now auctioning the $500 card and will auction the $125 card at a later date. The current bid on the $500 card is $625.

Was Johnathan's Card a scam?
What comes as a real shocker in this story is that Johnathan Stark comments HE KNEW THE CARD WAS BEING SCAMMED. He said that even though it was being scammed, he believed some people were still using it for good. In other words, loading money on the card which was being automatically transferred elsewhere and he was still benefiting from it. Very seldom were people actually able to use it to purchase a drink.

Johnathan benefited directly every time someone used the card. Each transaction earned him a star in the Starbucks My Rewards program where you earn a free drink coupon for each 15 transactions. Purchases and reloads both count. It was estimated that towards the end of the experiment, Johnathan was earning upwards of 100 free drink coupons per day. It was also huge PR for him and his company the longer the experiment lasted.

The End of Johnathan's Card
Even if the experiment was started with good intentions for social research and continued to operate on the premise of Pay It Forward, Johnathan should have stopped it as soon as it was known the scamming was occurring. Whether Johnathan transferred funds himself or not, him knowing of the scams and continuing to promote the project as people doing good for others makes him guilty of stealing himself in my book.

As soon as Starbucks found out about the card being siphoned, they notified Johnathan that the card would be deactivated, and it was on Friday night. It was a great experiment and people really believed in it. It gave people hope in humanity and brightened some peoples days. It is sad to see it come to and end, but Starbucks did the right thing. It was no longer being used for good, it was being used for the personal and/or financial gain of Johnathan Stark and countless other scammers.

A possible resolution?
The only "good" outcome I can see of this is if Starbucks were to deactivate every card which money was transferred to, for eBay to close the auctions for Tim Odin's cards and for Johnathon Stark to donate every free drink coupon received.

The whole scandal presents a new interesting question though. How was it that Tim and others were able to transfer funds from Johnathan's card, a registered Starbucks Card? Was this a security flaw in Johnathan's API which exposed the security code or account credentials, or is this a security hole in the Starbucks Card customer loyalty card system? Of course Johnathan's API is no longer accessible and all information has been erased from Google, but it is something I definitely intend to investigate further.

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