Loyalty programs: what you’re saving in dollars, you may be paying in data

Article published 5 February 2024

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Loyalty programs may be a tempting way to reduce grocery bills but think twice before signing over your data.

A survey from CHOICE a few years ago found that 90% of Australians were members of at least one loyalty program. In the midst of an ongoing cost of living crisis, these programs may be tempting options to reduce your bills. In fact in the 2023 financial year, when food prices increased by 7.5%, Woolworths netted 750,000 new sign ups to its ‘Everyday Rewards’ loyalty program.


However, most of these programs are significantly more sophisticated, and shadier, than your local café’s stamp card. When you sign up to most loyalty programs, you’re also signing over your data for companies to use (and profit from) in a range of different ways.

What sort of data is collected?

Signing up for a loyalty program might involve giving over information like your age, email address or phone number. When you begin using a loyalty program, you will also be giving companies your purchasing data: they’ll see which products you tend to buy and when, where you shop and how much you spend. Companies can then combine this information with other details found online, through your social media accounts or from websites that track your internet use.

How is this data used?

This information will help companies decide how to market to you so that you spend more money, or at least shop with them rather than with a competitor. They might start emailing you about particular products that they think you’ll buy, or they’ll offer you specials on a regular basis. In some cases, companies like airlines will change the prices they offer you online depending on your browsing behaviour or the information that they’ve collected on you.

Companies can also sell your data to other businesses or to so-called ‘data brokers’ who collect information from a range of sources to produce more detailed profiles that they can then sell as a marketing tool.

While the Australian Competition and Consumer Commission (ACCC) has recently reviewed the laws surrounding the use of your data, the Australian Government is yet to enact a lot of the ACCC’s recommendations, and has decided not to give consumers a blanket right to opt-out of targeted advertising.

Other problems with loyalty programs

Aside from the often murky ways in which they collect and use your data, loyalty programs have other issues. They can, for instance, offer another way for scammers to impersonate a trusted organisation. They can also cement the market power of already powerful companies. After all, your local independent grocer probably can’t offer you a rewards card, let alone make a fortune collecting and selling your data.

Importantly though, the pressure of rising prices means that many people don’t have the luxury of choice when it comes to these programs. As we noted in our submission to the Senate’s inquiry into supermarket prices: “customers are faced with a choice to either sign over their data with no way of knowing how it will be used, or pay higher prices for their groceries at a time when many people are struggling”.

What’s being done?

A range of advocates and researchers have called on the Australian Government to reform the Privacy Act to change the ways that companies can collect, store and use our data. In addition, the ACCC and the Office of the Australian Information Commissioner (OAIC) have recommended that customers be given more control over their own data so that they can opt out of having their information collected or tell companies to delete their data. While the Government has ‘agreed-in-principle’ to the majority of the ACCC’s recommendations, it could be a while before these changes are implemented.

For more information please email our media contact at media@cpsa.org.au

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