ACCC urges frequent flyer programs to clean up their act

Australia’s consumer watchdog is calling for frequent flyer programs to clean up their act when it comes to customer privacy.

The Australian Competition and Consumer Commission (ACCC) has released its final report into customer loyalty schemes and is urging programs to make some drastic changes as well as seeking broader legislative reforms to protect consumers.

The report recommended loyalty schemes including frequent flyer programs and hotel operators, better inform consumers, improve their data practices and stop automatically linking members’ payment cards to their loyalty scheme profiles. It also called for broader changes to consumer and privacy law.

“We are calling on companies that offer loyalty schemes to improve both their data practices and how they communicate with consumers, to help consumers understand how these programs operate,” ACCC Chair Rod Sims said.

“Even simple changes, such as more prominently alerting customers that their points are about to expire, for example, in the subject line of an email, could help prevent a consumer from losing points earned over several years.”

The watchdog said in a statement it is also concerned the profiling of consumers based on the data collected by some schemes, including through the sharing of consumer insights with third parties, could result in consumers receiving increasingly targeted advertising. This could also potentially result in different consumers being offered different prices for an identical product or service.

“There is also an emerging risk of real consumer harm if individual consumers were to be charged inflated prices based on profiling derived from their data,” Sims said.

“For example, if a person’s frequent flyer data or online search history indicates they can only travel on certain dates, or otherwise based on their income, geographic location or other information collected through the loyalty scheme they may be charged extra.”

Another major concern with loyalty schemes is privacy policies that are very vague and seek broad consents and discretions from consumers about how they’re going to collect, use and disclose their data.

“Many consumers would be shocked to find that some supermarket schemes continue to collect their customers’ data at the checkout even when they do not present their loyalty cards. They do this by tracking customers’ credit or debit cards from previous transactions,” Sims said.

“When a customer chooses not to present their loyalty card, we think it is reasonable that they would not expect their data to be collected for that transaction, and we are therefore calling on the relevant schemes to stop this practice.”

A spokesperson for Qantas told Travel Weekly it will be introducing improvements to its frequent flyer program next year, but did not specify if these changes would include the ACCC’s recommendations.

“There’s a lot about our frequent flyer program that our members tell us they love but there are also areas of the program that have increasingly come under pressure as a result of rapid expansion which is why we made significant changes to the program earlier this year like slashing carrier charges, making a million more reward seats available and making it easier to find seats on our website,” the spokesperson said.

A Virgin Australia spokesperson told Travel Weekly its Velocity program is “always looking for ways to improve and has taken on-board many of the ACCC’s observations to enhance our member terms and conditions”.

“We regularly review our program and policies to ensure that our members are clearly informed about our program including data practices,” the spokesperson said.

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Email the Travel Weekly team at traveldesk@travelweekly.com.au

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