Customer loyalty schemes

There are some important issues to consider if you’re thinking about signing up to a customer loyalty scheme.

About customer loyalty schemes

Customer loyalty schemes are marketing and promotional tools used to encourage consumers to have a connection to a particular brand and encourage repeat business. Consumers often join these schemes to earn discounts or points, which can be redeemed for rewards including goods and services.

Customer loyalty schemes review

In 2019, the ACCC reviewed various customer loyalty schemes and released a report that outlined its findings and recommendations. It called on loyalty schemes to improve their data practices and communications with their members, and recommended changes to consumer and privacy laws to better protect consumers.

See: Customer loyalty schemes - final report

Tips for consumers

  • Loyalty schemes don’t exist just to reward you for your loyalty. If you join a loyalty scheme, the operator might end up knowing more about you than you want them to.
  • Remember, personal information could be collected about you when you sign up and make purchases, combined with information gathered from other sources, including your social media and web browsing habits. This can build a detailed profile about you, which may be used to send you targeted advertising.
  • If you’re already a member of a loyalty scheme, be wary of making purchases you wouldn’t usually make just to earn more points.
  • Weigh up the cost of redeeming your points. You may ultimately be better off simply shopping around if you’re looking for the cheapest way to get a particular product or service.
  • When redeeming frequent flyer points to book a flight, be aware that you might have to pay taxes and other charges on top of using your points. In some cases, the cost of purchasing an airfare without using points might be similar to the taxes and charges you’ll pay when using points to book a flight.
  • Find out whether the points you’ve earned in the loyalty scheme will expire. Many loyalty schemes have conditions where the points will expire if you don’t continue to participate in the program.
  • If you decide to join a loyalty scheme, pay attention to any notices or emails you receive, as these often describe changes to the program.

Contact us

The ACCC encourages consumers to contact us and report concerns about their loyalty schemes.

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