Experts advising people to avoid loyalty programs

It is the busiest shopping time of the year, and shoppers are being warned that those innocent loyalty card offers available at every shop should definitely be avoided.

While the loyalty cards and programs appear free and offer you the chance to cash in on your largesse during the Christmas period, consumer group CHOICE says many people would be uncomfortable if they were aware of how much their data is shared and how these cards could lead to hidden costs.

CHOICE’s consumer data advocate, Kate Bower, said that customers should avoid signing up to these programs, unless they fully understood the terms and conditions.

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“We can’t blame Australians for getting excited to use their rewards cards for big purchases before Christmas and the Boxing Day sales,” Ms Bower said.

“We’re asking them to consider the hidden cost of these services, and avoid signing up to more over the holiday season.

“Loyalty programs aren’t free. The true cost of these programs is your personal data, which can be used for manipulative practices and even personalised pricing.

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“People might not realise that supermarket rewards programs share data and insights with their insurance businesses, while others could be sharing your personal information with data brokers. This is well beyond consumer expectations.”

A recent CHOICE survey revealed that 90 per cent of Australians have signed up to at least one loyalty program.

The survey also found that fewer than 10 per cent of people who have joined a scheme always read the privacy policy and almost a quarter have never read one at all.

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“We strongly believe people shouldn’t need to read long and poorly written fine print in order to protect their personal information,” Ms Bower said.

“Given how long and poorly written privacy policies are, it makes sense that people aren’t able to engage with them.

“Despite disclosures in terms and conditions or privacy policies, consumers probably don’t realise their data is being collected and used by supermarkets or to what extent. Data can even be collected when you don’t scan your existing loyalty cards.”

The survey revealed that 40 per cent of people were not aware that loyalty schemes could sell their information to data brokers and roughly the same number were not aware it could be used to make decisions about them, including their credit worthiness.

The survey also found that 70 per cent of people were concerned about their information being sold to data brokers and 62 per cent were concerned about schemes using this data to make decisions about them.

The consumer advocacy group is now calling on the government to make urgent reforms to make sure that businesses are transparent about the ways in which they use the data they collect from loyalty cards.

“The existing privacy laws are no longer adequate to cover the extent of personal data collection and processing,” Ms Bower said.

“The government needs to review whether the privacy act is sufficient to protect consumers and ensure they have adequate control of their data.

“Businesses must take greater responsibility for data protection and the government must continue to pressure businesses to do the right thing.

“There needs to be less burden on individuals to understand exactly what personal data they are giving away by signing up to loyalty programs.”

How many loyalty cards or schemes do you belong to? Were you aware that they could share this data so freely when you signed up? Are you concerned that so much of your personal information can be shared so easily? Why not share your thoughts in the comments section below?

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Written by Ben