Starbucks Korea on Thursday admitted that its summer giveaway bags had cancer-causing chemicals, and vowed to provide compensation to its customers with gift coupons.

“We deeply apologize to our customers who are disappointed in us for the recent issue (surrounding the giveaway bags),” Starbucks Korea said in a statement.

“On July 22, we have requested state-approved institutions to run tests on six unopened samples and five opened samples of our giveaway bags and detected formaldehyde on both outer and inner fabrics of the samples.”

Formaldehyde is a strong-smelling chemical used in adhesives, fabrics and building materials. It can cause cancer in humans if they are exposed to high levels, according to sources.

Starbucks Korea has been facing public backlash since last week, when an anonymous employee at the FITI Testing & Research Institute -- a state-run certification organization for consumer goods –- claimed that formaldehyde was detected in the giveaway bags on an online community. The bags were handed out for free to customers who purchased 17 Starbucks drinks from May 10 to July 11.

Suspicions arose of toxic substances on the merchandise after multiple online posts claimed early last month that the bags had a stinky odor. Starbucks Korea brushed off the claims explaining that the strong smell was due to the dye not having completely dried and assuring customers that the odor will disappear in a “couple of days.”

The company explained the “delayed response” that came Thursday was due to lack of government formaldehyde standards on accessories such as bags, compared with more solid yardsticks on clothes and certain fabrics such as bed sheets.

“Under the nation’s Electrical Appliances and Consumer Products Safety Control Act, the standard of formaldehyde currently stands at below 75 milligrams per kilogram for undergarments, t-shirts and pants and below 300 mg per kg for outerwear and bedsheets,” Starbucks Korea explained.

“For the unopened samples, the institutions found a range of 284 mg per kg to 585 mg per kg (an average of 459 mg per kg) of formaldehyde on the outer surface. The inner fabric of the unopened samples contained a range of 29.8 mg per kg to 724 mg per kg of the chemicals (with the average standing at 244 mg per kg),” the company added.

In regard to the second group of samples consisting of bags left opened in the air for two months, the company stressed that the level of formaldehyde was significantly less compared with the unopened samples.

The company plans to offer its customers vouchers for three free drinks as compensation. The customer must submit the bags to Starbucks branches across the nation until Aug. 31 to receive the vouchers. On top of this, it said the customers will have a choice of exchanging the controversial bags for a different piece of merchandise, or instead receive an additional online gift card worth 30,000 won ($23) for each bag.

“We plan to bolster our companywide quality control review system and expand related teams by hiring professionals,” Starbucks Korea vowed.

Meanwhile, authorities on Thursday launched a probe on the matter, vowing to launch a nationwide recall and other customer protection measures if necessary. The Korean Agency for Technology and Standards, a government body responsible for drafting industry standards under the Ministry of Trade, Industry and Energy will be leading the investigation.

Adding fuel to the fire, local media outlet YTN reported Wednesday that Starbucks Korea was aware that the giveaway bags contained a certain level of formaldehyde before the news broke on Saturday. After it received complaints from its customers, it requested the supplier of its giveaway bags to run a test with multiple institutes, including the FITI. Starbucks Korea then received the results confirming that the bags contained formaldehyde on June 11 – the day its monthlong giveaway event wrapped-up – but didn’t take any measures for more than a week.

Starbucks Korea opened its first branch in front of Ewha Womans University in western Seoul in 1991, and was last year acquired by Korea’s retail giant Shinsegae, which holds a 67.5 percent stake after buying 17.5 percent of shares from Starbucks Coffee International. It is the largest coffee chain in South Korea, generating more than 2 trillion won in annual revenue.

(mkjung@heraldcorp.com)