The ACCC has called for new law reforms to ensure loyalty programs do not discriminate against customers or rip them off. Do you agree?
The ACCC has called for new law reforms to ensure loyalty programs do not discriminate against customers or rip them off. Do you agree?

New loyalty card probe to protect Aussies

The consumer watchdog has called for a crackdown on loyalty programs over fears they could be used to discriminate against customers.

The ACCC said legislative reforms should be considered to ensure best practice in its final report into customer loyalty schemes, such as frequent flyer and supermarket points programs.

Competition concerns were also a focus of the report, with fears companies could "lock up" consumers to their programs.

The ACCC said in the review that loyalty schemes which did not provide sufficient transparency and meaningful consumer control over data collection and use had the potential to cause 'widespread detriment'.

It called on companies to stop automatically linking members' bank cards to their loyalty scheme profiles.

"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," ACCC chairman Robert Sims said.

The consumer watchdog also feared that data collection and sharing with third parties could result in increasingly targeted advertising that could result in inflated prices or even exclusion.

"Many consumers are increasingly concerned about receiving targeted advertising, in some cases from companies that they have never dealt with before," he said.

 

Customer loyalty cards can save money but they can also be expensive.
Customer loyalty cards can save money but they can also be expensive.

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"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."

The ACCC estimated 90 per cent of Australian consumers were members of a loyalty scheme and carried four to six rewards cards on average.

The country's largest loyalty scheme was Qantas with 12.9 million members. Woolworths Rewards was second with 11.7 million, followed by Velocity frequent flyer scheme with 9.8 million members.

About 2000 consumers made reports - which include complaints - over loyalty schemes to the ACCC in the five years to December, 2018. The consumer watchdog noted the rate of reports had since increased, with more than 250 recorded to October this year.

The ACCC said one of the most common complaints was over the imposition of unexpected or unreasonable taxes and charges as consumers went to obtain a reward.

Qantas, for example, made consumers pay 'carrier charges' if booking with loyalty points, which is levied to those who book flights using cash.