ACCC BLASTS LOYALTY SCHEMES

AFR
Lucas Baird
Dec 3, 2019

The consumer watchdog has called for Coles, Flybuys and Woolworths to end the automatic linking of credit cards and loyalty schemes.

The regulator has raised the alarm over the “broad consents” that loyalty schemes seek from consumers about the collection of their data, and the “vague disclosures” they make about how their data could be used and shared.

“Consumers would be shocked to find that some supermarket schemes … collect their customers’ data at the checkout even when they do not present their loyalty cards,” Australian Competition and Consumer Commission chairman Rod Sims said.

“They do this by tracking customers’ credit or debit cards from previous transactions.”

The recommendations are part of the ACCC’s scathing assessment of loyalty programs, which hoist unfair contract terms onto customers and handle data poorly.

In its final report into the systems, the Australian Competition and Consumer Commission blasted the industry for a range of practices with the potential to cause “widespread consumer “The ACCC remains concerned about a range of practices which persist within particular schemes,” the report said. “And therefore continues to recommend changes to particular industry practices and consumer and privacy laws.”

These manifested into five specific requested changes, including an overhaul of data practices in loyalty schemes and reforms to the Privacy Act.

The regulator also called for a prohibition on specific unfair contract terms and trading practices and improvements in how the programs communicate with customers.

“The ACCC considers that these recommendations will both protect consumers and ensure consumer trust in the digital economy and data-based innovation,” the regulator said.

“Having placed the industry on notice, the ACCC encourages consumers to contact us and report concerns where these practices are continuing with their loyalty schemes.”

The watchdog focused much of its attention on the practices of the nation’s most extensive programs like Qantas Frequent Flyer and Virgin Australia’s Velocity business. Together, the pair count almost 23 million members.

Though retail-focused schemes like Woolworth’s Rewards and the Wesfarmers-backed Flybuys programs – collectively netting more than 20 million consumers – also came under fire.