OAIC investigate Woolworths Rewards and Coles flybuys

Sally McMullen 13 July 2016 NEWS

Supermarket shop

Woolworths' Rewards and Coles' flybuys reward you for your loyalty, but what's the catch?

Retail loyalty programs are growing in popularity in Australia, with 88% of Aussie shoppers belonging to a loyalty program. If you belong to one, you probably know that they work by rewarding customers when they make a purchase. So what's in it for the retailer? While you earn rewards points, the organisation can collect data about your individual buying habits.

While many retailers use rewards programs this way, Coles flybuys (with 7.6 million active members) and Woolworths Rewards are two of Australia's largest loyalty schemes. As such, Woolworths' and Coles' loyalty programs have been the subjects of two assessment reports released by Australian Privacy Commissioner Timothy Pilgrim today. Understanding that there's no such thing as a free lunch, the Commissioner focused the personal information that is collected through loyalty programs and whether the two supermarket retailers were fully disclosing how they use this data and whether they complied with the Privacy Act 1988.

In the reports, Pilgrim found that both Woolworths and Coles used appropriate privacy notices that were consistent with the Privacy Act and the supermarkets' practices. According to the report, both Coles and Woolworths use the data to analyse past purchasing behaviour to determine which products and offers are most relevant and valued by members. These results are then used to drive targeted marketing campaigns. All of the information regarding these practices and how the data is used is available in the Woolworths Rewards or Coles flybuys terms and conditions.

While this information is available in the fine print, Pilgrim still argues that most Australians need to become more fully aware of the cost that comes with belonging to a loyalty program. According to Pilgrim, the details collected separately may seem insignificant, but when collated together, it provides organisations with a full picture of who we are, what we do and how we behave. As this information is invaluable to these organisations, it's important users understand the information that is being collected about them and the privacy policies that are in place.

Following the assessment of Coles and Woolworths, the Office of the Australian Information Commissioner will be conducting reports on some of Australia's other popular loyalty programs in the next year.

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