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Are your loyalty schemes compliant?

Last week the Australian Competition and Consumer Commission (ACCC) flagged that they had some concerns with customer loyalty schemes.

This is critical to the competition regulator because $110 million to $370 million have been generated from loyalty schemes alone.

Four concerns that the regulator highlighted are:

  • whether consumers receive the benefits advertised by loyalty schemes

  • unilateral changes by loyalty schemes to their terms and conditions, and poor communication about how their schemes work

  • poor disclosure about how consumer data is used and shared, including selling insights from consumer data to other parties without consumer knowledge and

  • the sharing of consumer data with unknown third parties

“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 Chairman Rod Sims said.

Sims added that most consumers don’t know that data is collected on them even if their loyalty cards have not been scanned.

“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,” the ACCC chairman said.

The ACCC is looking responses to their consultation draft by the 3rd of next month.

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