In a 97-page draft report on Australian loyalty schemes, the ACCC identifies several key areas of concern, ranging from opaque privacy policies to expiring frequent flyer points and airline carrier charges.
The ACCC is particularly concerned that consumers have limited control over how their personal data is collected, shared and sold by the operators of loyalty programs – often without the members’ knowledge.
“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,” according to Rob Sims of the ACCC.
As Australian Frequent Flyer has reported previously, supermarket loyalty programs such as Flybuys and Woolworths Rewards can even track your spending if you pay with your credit card but don’t scan your loyalty card.
“Consumers may also be shocked to find that some schemes collect their data even when they don’t scan their loyalty cards, or that they combine it with data from other sources that they might not even be aware of,” Sims said.
Loyalty schemes selling a false promise?
The ACCC report identifies many examples where loyalty program members haven’t been able to earn, redeem or hold onto their points as expected. The failure of loyalty programs to adequately inform members when their points will expire is one issue.
The ACCC has also accused some loyalty programs of making “unilateral changes that unfairly restricted the benefits available such as reducing the rate customers could earn points, or the value of points previously accumulated”. It’s not hard to see examples of this, such as when American Express devalued members’ existing Membership Rewards points back in April – or Qantas increasing the cost of Classic Flight Rewards and upgrades for premium cabins later this month.
In addition, the report singles out the excessive carrier charges imposed by airlines such as Qantas when redeeming frequent flyer points for a reward booking. As Australian Frequent Flyer has covered extensively, these carrier charges are often excessive and the airlines make it too difficult for consumers to find out what the charges will be prior to booking.
“Many people think they can redeem their points for a free flight, but in some cases, the cost of purchasing an airfare without using points may be similar to the cost of a flight using points once the airline adds on taxes and charges.” Mr Sims said.
The ACCC is currently inviting public submissions on the draft report until 3 October 2019. The final report will be released later this year.
Join the discussion on the Australian Frequent Flyer forum: ACCC slams loyalty schemes