The consumer watchdog has recommended that consumer data protections under the Privacy Act need to be strengthened and a broader reform of Australia’s privacy laws is needed, after it identified several concerning practices.
In its Customer Loyalty Scheme draft report, the ACCC highlighted how customer loyalty schemes – including frequent flyer, supermarket, and credit card operators – are not properly disclosing relevant information, providing sufficient transparency, or giving consumers control of how their collected data is used and shared.
According to the ACCC, loyalty schemes can contribute to a significant proportion of a company’s profits: some schemes generate A$110m – A$370m in earnings each year. Almost nine-in-ten adults are members of a loyalty scheme, with the average Australian carrying between four to six loyalty cards.
And firms are investing in these. Qantas recently overhauled its loyalty program, offering more than one million extra reward seats, a new lifetime qualification and tiered Points Club for non-flying spenders as part of a A$25m investment into its Frequent Flyer loyalty program. Similarly, Virgin recently overhauled its loyalty program, partnering with Freedom, while Telstra has launched a new loyalty program.
But the ACCC report said that loyalty programs are selling insights from consumer data to other parties without consumer knowledge, are sharing that data with unknown third parties, and are providing only a limited ability for consumers to opt-out of targeted advertising delivered by third parties on behalf of loyalty schemes.
“The privacy policies of these schemes are frequently very vague and don’t tell consumers who their data is being shared with or how it is being used, shared or monetised,” ACCC Chair Rod Sims said. The report reinforced similar recommendations that were made by the ACCC in its Digital Platforms Inquiry Final Report, which highlighted how Australians are still in the dark when it comes to the extent of the collection and use of their data by companies such as Facebook.
The ACCC is seeking comments on the draft report by 3 October and expects to release a final report later this year.
Sourced from ACCC, CMO Australia, ZDNet; additional content by WARC staff