SYDNEY – The Australian Competition & Consumer Commission (ACCC) is not happy with the way loyalty schemes are operated in Australia and has called for changes to protect consumers.
Loyalty schemes don’t exist just to reward you for your loyalty. If you join a loyalty scheme, the operator might end up knowing more about you than you want them to.
An extensive ACCC report recommends loyalty schemes, such as frequent flyer, supermarket and hotel operators, better inform consumers, improve their data practices and stop automatically linking members’ payment cards to their loyalty scheme profiles.
It also calls for broader changes to consumer and privacy law.
In a tip to consumers, the ACCC warns, “Loyalty schemes don’t exist just to reward you for your loyalty. If you join a loyalty scheme, the operator might end up knowing more about you than you want them to.”
The ACCC is calling on companies that offer loyalty schemes to improve both their data practices and how they communicate with consumers, to help consumers understand how these programmes operate.
“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, ” said ACCC chairman Rod Sims.
The ACCC is also concerned that the profiling of consumers based on the data collected by some schemes, including through the sharing of consumer insights with third parties, could result in consumers receiving increasingly targeted advertising.
“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,” Mr Sims said.
The ACCC says that frequent flyer programmes should “consider disclosing any particular routes, or corresponding seasons, or classes of travel on a route, where ‘free’ seats are not available”.
Further, it said consumers in Australia have a right to know if Classic Flight Reward or Reward Seat availability is not being released on certain routes and travel classes, as this could influence their decision to earn points in the first place.
The ACCC also wants airlines to be more transparent when they unilaterally make changes to their frequent flyer schemes that reduce the value of members’ points.