The Australian Competition and Consumer Commission is calling for better regulation of loyalty schemes such as frequent flyer and supermarket points to protect consumers’ privacy.
The consumer watchdog says it is concerned about the profiling of consumers based on data collected by such schemes, including the sharing of such information to third parties.
“Many consumers are increasingly concerned about receiving targeted advertising, in some cases from companies that they have never dealt with before,” ACCC chairman Rod Sims said.
Consumers might even be charged inflated prices based on their frequent flyer data or online search history, Mr Sims said, though he did not say that had actually occurred.
Many of these loyalty schemes have privacy policies that are very vague and seek broad consent and discretion about their use of consumer data, Mr Sims said.
“Many consumers would be shocked to find that some supermarket schemes continue to collect their customers’ data at the checkout even when they do not present their loyalty cards,” Mr Sims said.
“They do this by tracking customers’ credit or debit cards from previous transactions,” Mr Sims said.
The report recommended that Coles, Flybuys and Woolworths Group should end the practice of automatically linking members’ credit cards to their profile.
Almost 90 per cent of Australians are estimated to be a member of at least one loyalty scheme, and the average adult is a member of 4.3, the ACCC’s 137-page report says.
The country’s largest loyalty scheme is Qantas’ frequent flyer scheme, with 12.9 million members, followed by Woolworth Rewards with 11.7 million and the Velocity frequent flyer scheme with 9.8 million.
Other loyalty schemes with millions of members include Flybuys, the Priceline Sister Club, MYER One and Cinebuzz Rewards, plus the schemes run by the major hotel chains, the big banks and American Express.
The loyalty schemes of Qantas and Virgin Australia are significant contributors to their overall financial performance, contributing profit margins of almost 23 per cent and almost 30 per cent, respectively, the report notes.