Customer Loyalty Programs: What is your brand loyalty worth?
“Free” loyalty rewards could have hidden costs
July 2, 2019 — OTTAWA, ON — Competition Bureau
Loyalty programs offer points that you can redeem for discounts, gift cards, merchandise and travel. Generally, the more you spend, the more rewards you get. They’re designed to attract new customers, retain existing customers and entice you to spend more.
In exchange for the “free” rewards, exclusive offers and other perks for being a loyal shopper, you’ll be asked to provide personal information such as your name, mailing address, email address, phone number, and date of birth when you sign up.
And, every time you use your loyalty card at checkout, the retailer collects additional information about your shopping habits – what you purchase, when you shop, how often you shop, how much you spend and how you pay. This information can be used by the retailer to target their ads to you so that you’ll come back and spend more.
Before signing up for a loyalty program, the Competition Bureau offers the following tips:
- Carefully review the terms and conditions. Understand how the loyalty program works, how you can earn points and redeem them, how the dollar value of the points is calculated (e.g. 1000 points = $10), and whether you need to pay any additional costs, such as taxes when you redeem points. Also, if you haven’t earned or redeemed points for a while, be aware that your account could expire due to inactivity, and you could lose all your points.
- Know the risks. Companies may change their loyalty programs without notice. They may reduce the value of your points, meaning that you’ll need to spend more to get your points and rewards. Also, the retailer can terminate the loyalty program at any time, which could result in you losing all your points.
- Try to avoid excessive contacts and spam. Check to see if you can opt out of any emails or ads before you join a program - or even after - to avoid receiving a lot more marketing spam in your inbox, mail, and even phone calls.
- Be aware of the potential for fraud and theft. Your personal information has value, particularly if your loyalty program is tied to a credit card, and it may be a target for hackers. Fraudsters may also target you through phishing emails to steal your valuable points.
- Be aware that you will be targeted with more offers. In addition to receiving more personalized offers from the retailer, you also may be targeted by partner brands or third parties if your information was shared or sold to them. If you are not interested in receiving certain marketing communications, you can opt out.
If you believe a loyalty program has misled you, contact the Competition Bureau and file a complaint by phone at 1-800-348-5358 or online.
If you suspect a company is misusing your personal information, you should contact the retailer directly, or the Office of the Privacy Commissioner of Canada to file a complaint.
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The Competition Bureau, as an independent law enforcement agency, ensures that Canadian businesses and consumers prosper in a competitive and innovative marketplace.
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