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Customer Loyalty Schemes need to do better

In recent years, customer loyalty schemes have come into question.

Last week saw the release of the Australian Competition and Consumer Commission’s (ACCC) final report on customer loyalty schemes, calling for better protections for consumers and broad legislative reforms. The report focusses on consumer issues, data practices and competition issues.

According to the ACCC, over the course of this review they found that some loyalty schemes’ practices could lead to consumer detriment:

  • Loyalty schemes do not present their terms and conditions and privacy policies in a way that consumers can readily understand.

  • Many make the unilateral changes to their terms and conditions in a way that might be unfair to consumers.

  • Many collect, use and disclose consumer data in ways that does not align with consumers’ preferences.

The report presents five core recommendations:

  1. To improve the methods by which loyalty schemes communicate with customers.

  2. To prohibit against unfair contract terms and certain unfair trading practices.

  3. To end the practice of automatically linking members’ payments cards to their loyalty scheme profile.

  4. To improve data practices of loyalty schemes.

  5. To strengthen protections in the Privacy Act and broader reforms of Australian Privacy Law.

In an official statement last week, ACCC Chairman Rod Sims said, “Our recommendations would protect consumers and help ensure consumer trust in loyalty schemes, in the digital economy, and in data-based innovation, which is a benefit for the broader economy.”

Earlier in the year, the GRC Professional spoke to Bronwyn Gallacher from CCL Consultants about practices around the use of consumer data. Click here to listen.

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