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ACCC calls for improved data protection in loyalty schemes

Retailers need to improve their customer loyalty schemes and have broader legislative reforms to protect consumers, according to consumer watchdog ACCC’s latest report.

ACCC recommends that companies running loyalty schemes, such as airlines or supermarkets, better inform consumers and improve their data practices. They also want them to stop automatically linking members’ payment cards to their loyalty scheme profiles.

“Even simple changes, such as more prominently alerting customers that their points are about to expire, for example, in the subject line of an email, could help prevent a consumer from losing points earned over several years,” ACCC chair Rod Sims said.

The consumer authority has previously raised concerns over the sharing of data with third parties which could see consumers receive targeted advertising. This can result in different shoppers getting different price offers for an identical product or service.

“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,” Sims explained.

ACCC said that many privacy policies are very vague about how they’re going to collect, use and disclose their data. Some supermarket schemes gather customers’ data at the checkout even when they don’t present their loyalty cards by tracking customers’ credit or debit cards from previous shopping transactions.

“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,” revealed Sims.

Although some loyalty scheme operators have already made changes following the draft report released by the ACCC in September, the authority said that many still continue the same old practices.

”We also recommend that unfair contract terms be prohibited, rather than simply being voidable, and that a new law against certain unfair trading practices be considered,” Sims said.

The ACCC encourages consumers to report concerns on loyalty schemes practices.

This story originally appeared on sister site Inside FMCG.

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