Customer loyalty schemes were an enforcement priority for the Australian Competition and Consumer Commission (ACCC) in 2019, and in early December 2019 the ACCC released its final report on this issue. The report calls for a number of reforms to address consumer concerns over the way loyalty schemes are used by businesses in Australia and to remedy practices that may cause consumer detriment. The report focuses on consumer communication issues, the use of consumer data and competition issues.
The ACCC raises concerns over the lack of transparency around customer loyalty schemes - many consumers are simply not aware of changes to redemption value of loyalty points, expiry periods or taxes imposed on point redemption purchases. Customer loyalty schemes also raise competition concerns for the ACCC, as businesses can establish dominance through operating loyalty schemes in saturated markets, and use data obtained through these schemes to protect and promote their market position. The use of data obtained through consumer loyalty programs raises similar issues to those raised in the ACCC's Digital Platforms Inquiry Final Report (see our client alert here). We note that the ACCC did not make any recommendations in relation to the identified competition issues.
If your business operates a customer loyalty scheme, you may need to consider making changes to the terms, conditions and policies governing the collection of consumer data to reflect the recommendations in the ACCC's report.