Review finds customer loyalty schemes need transparency and fairness

A person swiping a credit card on an eftpos machine

The ACCC has released its Customer loyalty schemes draft report for public comment. The report outlines the ACCC’s draft findings and recommendations following research and targeted consultation earlier this year. The review focussed on competition and consumer issues arising from customer loyalty schemes.

There are two major findings covered in the draft
report that are of interest to consumers and consumer advocates.

Questionable data use policies

The ACCC found that some loyalty schemes collect,
use and disclose consumer data in ways that do not meet many consumers’
preferences. In particular, many loyalty schemes do not provide sufficient
transparency and meaningful consumer control over the collection, use and
disclosure of consumer data. Some loyalty programs have been found to:

  • seek broad consents from consumers and make vague disclosures to them about the collection, use and disclosure of their data
  • provide consumers with limited insight and control over the sharing of their data with unknown third parties
  • provide only a limited ability for consumers to opt out of targeted advertising delivered by third parties on behalf of loyalty schemes.

Poor communication with consumers

The ACCC suggests that operators of loyalty schemes need to review how they communicate
with consumers. The review found that consumers do not readily understand how
some loyalty schemes present their terms, conditions and privacy policies. The
review also found that some loyalty schemes make unilateral changes to their
terms and conditions in a way that may be unfair to consumers, for example, by
unilaterally reducing the rate at which they could earn points, or the value of
their points previously accumulated.

Draft recommendations

In the draft report the ACCC makes draft recommendations calling on loyalty schemes to:

  • improve how they provide consumers with information on how they handle consumer data and provide consumers with meaningful control over their data, and
  • improve how they communicate with their members.

Key findings and recommendations are summarised in the Consumers’ guide.

The public consultation process is open until 3 October

View the draft report here.