Rewards data mined
ACCC says points schemes privacy ‘vague’
SOME customer loyalty schemes are building up detailed profiles about people and selling those insights to other businesses, the consumer watchdog says.
The Australian Competition and Consumer Commission says customers have limited control over how their personal information and other data can be used by loyalty schemes and with whom it can be shared.
“The privacy policies of these schemes are frequently very vague and don’t tell consumers who their data is being shared with or how it is being used, shared or monetised,” ACCC chair Rod Sims.
Mr Sims said the data collected by loyalty schemes could be used to profile consumers and produce insights about their buying behaviour, which may then be shared with or sold to third parties.
“Consumers may also be shocked to find that some schemes collect their data even when they don’t scan their loyalty cards, or that they combine it with data from other sources that they might not even be aware of,” he said.
“Most people think they are being rewarded for their loyalty with discounts or points, but in reality some schemes are building up detailed profiles about consumers and selling those insights to other businesses. Selling insights and access to loyalty scheme members are becoming increasing sources of revenue.”
About nine in 10 adults are members of a loyalty scheme such as frequent flyer, supermarket or credit card programs, with the average Australian Competition and Consumer Commission chair Rod Sims says customers have little control over their data Australian carrying between four and six loyalty cards.
The ACCC said some loyalty schemes generated $110 million to $370 million in earnings each year.
Consumers have complained to the ACCC about not being able to earn, keep or redeem their points in the way they expected.
“Many people think they can redeem their points for a free flight, but in some cases, the cost of purchasing an airfare without using points may be similar to the cost of a flight using points once the airline adds on taxes and charges.” Mr Sims said.
In a draft report about customer loyalty schemes, the ACCC said the programs’ privacy policies were opaque and consumers were often unable to make informed choices about the use of their data.