Loyalty Cards: Reward or Threat? | Merchant Firm
When you’re stacking up grocery items at the checkout line, you’re presumably not stressed over whether your market chain is aggregating a profile of you in view of what you purchase, and putting away that data for its own utilization. All things considered, who cares on the off chance that you get one brand of tissues over another or support name-mark microwave pizzas over store brands? (Loyalty Cards: Reward or Threat?)
Store chains mind. So does CVS. To such an extent that they utilize discount cards (alluded to as “membership” or “loyalty” cards) to offer you what appear like extraordinary deals. They utilize the cards to monitor what you buy, how regularly you shop, and what your purchasing inclinations are. (Loyalty Cards: Reward or Threat?)
And, just as data brokers like ChoicePoint collect personal data and use it to build an aggregate “profile” of individual consumers, supermarket chains use their stored data to target buyers with “special” offers and “preferred” advertisements from their marketing partners. (Loyalty Cards: Reward or Threat?)
This is not a uniquely American phenomenon. Everywhere a supermarket, pharmacy, or department store can be found, anywhere in the world, you can assume there’s a “discount rewards” program in place to provide customers with benefits that go “beyond mere shopping,” as one writer put it in the May 29th edition of the Hindu Business Journal. (Loyalty Cards: Reward or Threat?)
“You need to be a compulsive shopper to make the best of the loyalty cards. If you visit the store just once a year or like to comparison shop, these cards may not have much to offer,” the article noted.
The ongoing news that CVS ExtraCare card clients’ data was uncovered on the organization’s Web webpage illustrates the dangers that loyalty card programs involve. The inquiry at that point moves toward becoming, what is more vital – sparing cash or ensuring your protection?
What’s The Big Deal?
According to a 2004 poll conducted by Boston University’s College of Communication, 86 percent of American shoppers use some form of store card or discount card, “and the majority of them say the benefits of the card are worth giving up some privacy.” A Canadian Broadcasting Corporation (CBC) article in 2004 stated that 76 percent of Canadian consumers belong to at least one loyalty program. A British advertising column boasted that loyalty card programs had achieved “85% consumer penetration” in the U.K. circa March 2005. (Loyalty Cards: Reward or Threat?)
Loyalty card clients appreciate discounted costs, extraordinary coupon offers, and refunds or “focuses” towards airline tickets or shopping binges, much like Visas. What’s more, numerous loyalty card programs offer substantial advantages, for example, CVS’s intend to assign pharmaceuticals bought with their card as fitting the bill for medicinal Flexible Spending Accounts (FSA’s), or the Upromise design, which dispenses bits of cash spent utilizing taking part stores’ loyalty cards to your kids’ 529 school bank account. (Loyalty Cards: Reward or Threat?)
Many users consider the idea of targeted marketing a boon — if they like one kind of product, why wouldn’t they want to get offers for similar products? (Loyalty Cards: Reward or Threat?)
Most shoppers approach loyalty cards with a mixture of weariness, indifference, and amusement. Technology writer Declan McCullagh succinctly stated that “nobody’s forcing shoppers to sign up for such cards. If you don’t like stores that offer them, take your business elsewhere.” Or as blogger Jane Hauntanen put it, “Now people will know [I] bought a roll of dental floss at 7:49 PM at CVS and paid two dollars for it. That is an invasion of my privacy. Of course, if it bothered me that much, I could just pay cash and forget about the savings.” (Loyalty Cards: Reward or Threat?)
In any case, numerous customers are progressively mindful that loyalty cards are being utilized to order profiles of their shopping propensities for later utilize, and that this information can be cultivated out to business accomplices, telemarketers, and standard mail specialists. What isn’t open information, be that as it may, is the manner by which regularly discount card programs themselves are outsourced to different organizations. (Loyalty Cards: Reward or Threat?)
Outsourcing for Discounts
Running a loyalty card program is a huge business, and frequently acquires overwhelming managerial expenses. CVS’ ExtraCare program got it an additional 30 million customers and $12 billion multi-year in income over its 4,000 stores, yet the broad equipment and programming usage important to run such a program has kept other real medication store chains from presenting comparable projects. (Loyalty Cards: Reward or Threat?)
Numerous retailers swing to outsider vendors and advertisers like Arthur Blank and Alpha Cards to outline and build up their discount card programs. Alpha Cards’ client loyalty program gloats of utilizing an attractive strip and “keen card” innovation to “offer your clients’ item discounts and indicates stock, and record profitable information about their purchasing inclinations in the meantime.” The CardWerk company advocates using smart card technology at point-of-sale transactions to reduce fraud, improve usability, and “maintain customer loyalty.”
Details of loyalty points and the point-gaining transactions are being captured by a stand-alone card terminal and transferred to a PC or a back-end server for further analysis. The loyalty software maintains a complete database of all customer rewards and reward suppliers. (Loyalty Cards: Reward or Threat?)
It is anything but an irrational worry that clients’ purchasing profiles will be as powerless against misrepresentation and abuse as their charge card numbers, especially if the outsider organizations rehearse remiss safety efforts. Innovation daily paper Information Week announced in May of 2004 that “Unisys chief security adviser Sunil Misra [discussed a] case where a member of the senior IT staff at a large supermarket chain created a secret back door so he could access and sell protected information.” (Loyalty Cards: Reward or Threat?)
Valuetec, a leading provider of gift and loyalty cards to businesses and retail store chains, recently partnered with credit card payment processor CardSystems to provide “comprehensive gift card and loyalty card products”, as well as implementing “stored value systems”, where a customer gets a set point balance on their card, which replenishes when they make purchases at the sponsoring store. CardSystems was the vendor responsible for 40 million Visa and MasterCard users’ data being exposed to potential theft in June 2005. (Loyalty Cards: Reward or Threat?)
In a headline-production case from August of 2004, Philip Scott Lyons, a firefighter from Everett, Washington, was captured and blamed for the fire-related crime after a police canine unit sniffed out a fire starter unit covered up in his home with a Safeway mark appended. Safeway gave the Lyons’ acquiring history to the police, uncovering that they bought the fire starter multi-month sooner. (Loyalty Cards: Reward or Threat?)
The charges were later dropped when another person came forward and confessed to the crime. The fact remains, however, that Safeway provided a customer’s personal information to law enforcement, thus skirting the Constitutional and Federal laws that prohibit government and police agencies from collecting personal information and creating databases. (Loyalty Cards: Reward or Threat?)
On a more basic level, the data collected about your buying habits can be used for everything from custody hearings to psychological profiles to decisions regarding employment. Buying condoms? Must mean you’re sexually active, and possibly an unfit parent or health risk. Buying weight-loss diet pills? You might end up with a higher health insurance premium or unexpected physical evaluation at your job. (Loyalty Cards: Reward or Threat?)
In addition, considers have discovered that loyalty cards’ main role – to offer investment funds to individuals – do no such thing. Indeed, stores that utilization loyalty card programs really increment the general costs of items for non-club individuals, making buys more costly for all purchasers and lessening the edge of card individuals’ sparing to nothing. “Regular” items can be increased from 28-71% after card programs are presented. (Loyalty Cards: Reward or Threat?)
The most subtle and insidious side effect of loyalty programs appears to be a growing “class” strategy of marketing, focusing on the richest and most frequent shoppers and excluding “negative return” or “undesirable” customers.
What You Can Do
If the concept of loyalty cards being used as tools to gather personal information troubles you, there are many options to take, including the following: (Loyalty Cards: Reward or Threat?)
• Get access to your info. Find out how your store controls your information, how it’s maintained, and how you can get access to it. Contact their press office and customer service representatives and demand to have your personal profile provided to you. If you want it removed, find out what it will take, if they charge fees, if employees get bonuses for recruiting for loyalty programs, etc. (Loyalty Cards: Reward or Threat?)
• Opt-out. You can always refuse to sign up for a card, and as with any direct-mail service, you can choose to opt out of their “partnership services” or “special offers.” (Loyalty Cards: Reward or Threat?)
• Shop elsewhere. The best way to ensure businesses don’t abuse loyalty programs is to vote with your wallet. Support stores that don’t use loyalty cards or ask for extensive personal information. Who knows? You might even find more bargains. (Loyalty Cards: Reward or Threat?)
(Loyalty Cards: Reward or Threat?)
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