Consumer NZ warns loyalty schemes could be cashing in on customer data

Fly Buys loyalty programmes

Is your data for sale?

Consumer NZ says New Zealanders may not be aware of the extent to which data about them is being collected by loyalty schemes – and then, in some cases sold.

A 2019 report by the Australian Competition and Consumer Commission (ACCC) found some loyalty schemes were earning  $374 million a year from selling customer data.

Consumer NZ head of research Jessica Wilson said it was likely that data was lucrative for schemes here, too. She said rewards were used to tempt people to sign up, then “the cash cow for [the schemes] is the data and the uses they can make of it”.

She said selling data was an increasingly important revenue stream for loyalty schemes but there was little information disclosed upfront to consumers about what might happen to information schemes held about them.

Terms and conditions were often written very generally, she said, so it was hard for consumers to get a sense of what was really happening.

Sometimes information about people’s shopping habits could be used to add a premium on to prices that were displayed to them, she said.

AA Smartfuel told Consumer that the amount it earned from selling aggregated data to partners was less than $40,000 in the last financial year. It also shares personally identifiable information with Countdown.

A spokeswoman for Loyalty NZ, which runs Fly Buys, said the scheme would “occasionally” share data with a number of businesses that participated in Fly Buys, with an agreement that the data should be securely stored, not shared with anyone else and used only for purposes that provide customer benefits,

“In return for that data sharing, we charge minimal fees, which are commercially sensitive. The fees help us recover our costs to supply the data and we’re able to improve the Fly Buys programme for our customers.

“We do not sell or otherwise share customer data with any businesses that are not Fly Buys participants.”       

Antoinette Laird, spokeswoman for Foodstuffs, said it did not sell Clubcard data.

“From time to time we do have to share our data with third parties for marketing services we are unable to provide in-house. For example, we use a mail house to help us send out Clubcard or Sticky Club offers.”

When customers used their cards, information about the purchase was collected so that the retailer could understand their needs and tailor offers in future, she said.

Marketing commentator Ben Goodale, who was involved with the development of New World’s Clubcard, said Consumer NZ’s report made the situation sound scarier than it was.

He said New Zealand’s market was different to that of Australia.

Any data that was shared between partners would be at a high level, he said, and not relating to individual shopping habits. “It’s not what Mary has done but 20 per cent of people are behaving like this and 15 per cent like that.”

Goodale said New Zealanders should be much more wary about the information they gave to foreign websites.

“The threat to Kiwis around data privacy is not the companies over here that you shop with every day but the ones that you’ve never heard of that you might give data to when you sign up.”

By Susan Edmunds. This article was originally published in Stuff, Feb 12 2020