Improvements to customer loyalty schemes and broader legislative reforms are required, according to the ACCC’s final report into customer loyalty schemes.
Released on Tuesday, the report recommends loyalty schemes, such as frequent flyer, supermarket and hotel operators, better inform consumers, improve their data practices and stop automatically linking members’ payment cards to their loyalty scheme profiles. It also calls for broader changes to consumer and privacy law.
“We are calling on companies that offer loyalty schemes to improve both their data practices and how they communicate with consumers, to help consumers understand how these programs operate,” ACCC Chair Rod Sims said.
“Even simple changes, such as more prominently alerting customers that their points are about to expire, for example, in the subject line of an email, could help prevent a consumer from losing points earned over several years.”
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Data collection a concern
The ACCC is also concerned that the profiling of consumers based on the data collected by some schemes could result in consumers receiving increasingly targeted advertising.
This could also potentially result in different consumers being offered different prices for an identical product or service.
“Many consumers are increasingly concerned about receiving targeted advertising, in some cases from companies that they have never dealt with before,” Mr Sims said.
“There is also an emerging risk of real consumer harm if individual consumers were to be charged inflated prices based on profiling derived from their data.
“For example, if a person’s frequent flyer data or online search history indicates they can only travel on certain dates, or otherwise based on their income, geographic location or other information collected through the loyalty scheme they may be charged extra.”
Privacy policies another concern
Another major concern with loyalty schemes, according to the ACCC, are privacy policies that are “very vague” and seek broad consents and discretions from consumers about how they’re going to collect, use and disclose their data.
“Many consumers would be shocked to find that some supermarket schemes continue to collect their customers’ data at the checkout even when they do not present their loyalty cards. They do this by tracking customers’ credit or debit cards from previous transactions,” Mr Sims said.
“When a customer chooses not to present their loyalty card, we think it is reasonable that they would not expect their data to be collected for that transaction, and we are therefore calling on the relevant schemes to stop this practice.”