By LESLEY GREGORY
Financial regulators have loyalty cards under the spotlight as “rewards” schemes proliferate and become more complex, and as advancing technology allows businesses to interrogate the data from your spending to learn even more about you.
In Australia, the consumer regulator has issued a report recommending that loyalty scheme operators — such as airlines, stores and hotel chains — better inform consumers and improve their data practices, saying that their terms are very broad and privacy policies very vague.
The Australian Competition and Consumer Commission (ACCC) also thinks consumers would be surprised to know that some schemes collect their data even when they don’t show a loyalty card, by tracking them using the credit or debit card information linked to their membership.
And it raises the concern that “profiling” of consumers using such data could one day result in different consumers being offered different prices for identical products or services, based on their perceived willingness to pay. If an airline knows you like to travel in October, for instance, its online booking platform might serve up a higher than average price the next time you search for October flights.
Before we get to that point — if we haven’t already — we should think about the true value of the loyalty cards we currently hold. Some may well stand up to scrutiny, but make sure you know which ones are worth keeping and which ones are just marketing tools helping businesses sell you things you may not need, at prices you might be able to beat elsewhere.
As I recently disclosed, I was surprised to find I’d accumulated more than 20 loyalty cards – not including the plastic ones I’d lost or the digital ones I’d forgotten about. That got me thinking about the ones worth keeping, so I started to do the sums. I found that, on one particular card, the £20 “reward” I was looking forward to was the equivalent of a 2 per cent discount on the £1000 I had to spend to earn it in the first place. In the meantime, I’d handed over something much more valuable to the business — my data.
The true value
How hard is it to exchange your points for something tangible? What’s the conversion rate like? A Deloitte survey found that while most respondents said they liked loyalty schemes, less than half always redeemed their points. I tried a real-world test on a water carbonator worth about £50. I’d accumulated about 35,000 points in my supermarket loyalty scheme and its site said these were worth about £90 in spending value. So I went to the scheme’s online store and found the carbonator — for 43,000 points, or my 35,000 points plus a top-up of £25. Clearly, my points were not really worth £90, or even £50. In real money, rather than reward money, they were worth perhaps £25. Here’s a tip though: I discovered that it cost just 20,000 points to buy a £50 gift card to spend in an associated department store. Make use of the gift cards.
Mind the caps
Check the the terms and conditions of your loyalty schemes. Some require a minimum spend before you start earning rewards, and some impose a cap limiting the amount of rewards you can earn and spend over a given period. In some schemes, unused points expire after a certain amount of time. Points expire after just three months on my pharmacy-based rewards card. Be careful that you don’t end up paying higher prices in a particular store thinking you’ll earn rewards when in fact you’ve hit a cap. And don’t lose the little value that’s available by letting your points expire. Equally as important are broad terms like this real example from one of my memberships: “By applying for and/or using a Club card, each member agrees to the collection, use and disclosure of their personal information”. As the ACCC says, that’s very broad. Disclosure to whom?
Leaving a scheme
Have you ever tried to leave a loyalty scheme? Until now I’ve just let them linger — out of sight, out of mind. Go to the Contact Us information on the website of the business running the loyalty scheme and phone or email them saying you want to leave the scheme, provide your membership details, and ask them to confirm in writing that this has been done.
LESLEY GREGORY is an experienced personal finance and consumer journalist. If you’re interested in more of her personal finance tips, here are some more of her most recent articles: