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Loyalty schemes warrant closer look
With almost nine in 10 Australian adults aligning themselves with at least one customer loyalty scheme, the ACCC has warned consumers to not be blind in their company devotion.
Loyalty schemes warrant closer look
With almost nine in 10 Australian adults aligning themselves with at least one customer loyalty scheme, the ACCC has warned consumers to not be blind in their company devotion.
Highlighting the widespread cause for its concerns, in a draft report released by the commission, it flagged that the average Australian carries between four and six loyalty cards, while some of Australia’s most popular loyalty offerings are reported as having more than 10 million members.
The major issues, according to the ACCC, centre around whether consumers are receiving the benefits that are advertised by loyalty schemes, unilateral changes to program terms and conditions, and poorly communicated information about how schemes work.
The sharing of data is also a contentious issue, with the commission raising poor disclosure about how consumer data is used and shared, including the selling of insights from consumer data to other parties without the consumer’s knowledge.
Weighing in on the issue, ACCC chair Rod Sims gave an example that “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”.
“Loyalty scheme operators must ensure they comply with the Australian Consumer Law, including by avoiding statements that are incorrect or likely to create a false impression, and avoiding unfair contract terms,” he said.
Commenting on the ACCC’s report, he said: “Loyalty schemes also need to review the way they explain to customers how their schemes work, and how they notify their consumers of any reductions to the benefits offered.”
“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.”
With some loyalty schemes generating upwards of $350 million per year, Mr Sims 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,” according to the chair.
“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,” Mr Sims continued.
“Having put loyalty operators on notice, we call on consumers to contact the ACCC to report concerns.”
“The ACCC will consider these concerns in deciding whether enforcement action will be required to effect broader change,” he added.
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