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Tech & Science ACCC says stop: Woolies, Coles dragged over dodgy loyalty tracking

14:10  03 december  2019
14:10  03 december  2019 Source:   smartcompany.com.au

'Risk of real consumer harm': ACCC sends warning on loyalty schemes

  'Risk of real consumer harm': ACCC sends warning on loyalty schemes The ACCC says that major retailers and airlines can use data collected to discriminate against customers with inflated prices, while also hurting competition by "locking in" customers with loyalty points. The Australian Competition and Consumer Commission's final report into loyalty programs, released on Tuesday, also found that members in some schemes were having their points cancelled without fair warning, and that consumers often have little insight or control over how their personal data is collected or shared with third parties. require(["inlineoutstreamAd", "c.

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Supermarket giants Coles and Woolworths should stop tracking customer purchasing behaviours by linking debit and credit cards to their respective loyalty schemes, the Australian Competition and Consumer Commission (ACCC) says.

The ACCC today released its 149-page final report into the operation of consumer loyalty schemes in Australia, finding major programs run by big business have created a host of consumer, competition and data practice issues that potentially cause “widespread consumer detriment”.

Making five recommendations on Tuesday, the ACCC took aim at the major supermarkets specifically, also noting the increased use of big data analytics poses competition risks that could raise barriers to entry for smaller firms.

Coles to pay $5.25m to farmers supplying Norco cooperative for 'misleading conduct' in marketing material

  Coles to pay $5.25m to farmers supplying Norco cooperative for 'misleading conduct' in marketing material Coles will pay more than $5 million to Norco dairy farmers after it was found it had not passed on the full amount of a milk price rise, despite claiming it did in a marketing campaign. The payments follow an Australian Competition and Consumer Commission (ACCC) investigation into whether Coles had fully passed on to Norco a 10 cents per litre price increase it charged consumers for Coles branded milk, as it claimed it would do in marketing materials.The ACCC's investigation focused on claims that when an unrelated 6.

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The competition watchdog has begun proceedings in the Federal Court against Coles and Woolworths for allegedly breaching an ACCC chairman Rod Sims says the discounts offered exclusively to Coles and Woolworths customers could drive up general pump prices and affect the structure of the

More broadly, the competition watchdog has called on businesses to “review their approach to presenting terms and conditions”, saying the ACCC has received about 2000 reports about loyalty schemes in the five years to December 2018.

“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 in a statement on Tuesday.

Coles is forced to pay $5million to drought-stricken farmers after an investigation found the supermarket giant ripped them off over the price of milk

  Coles is forced to pay $5million to drought-stricken farmers after an investigation found the supermarket giant ripped them off over the price of milk Supermarket giant Coles has been forced to pay Norco dairy farmers more than $5million after allegedly failing to pass on the full price rise it charged customers for milk. The payout follows an investigation by the Australian Competition and Consumer Commission (ACCC) that found Coles did not pay Norco a 10 cents per litre price rise.Coles told shoppers in March it was increasing the price of its own Coles brand milk, supplied by Norco, to raise money for drought-stricken farmers. The grocery retailer vowed in marketing materials that the extra money would be passed straight on to dairy farmers and milk processors.

It said three of its home brand products - the Abode three litre stainless steel deep fryer, Woolworths Select drain cleaner, and safety matches - were Woolworths and rival Coles have faced significant scrutiny from the ACCC in recent years, including over the use of fuel vouchers at their petrol stations.

It said three of its home brand products - the Abode three litre stainless steel deep fryer, Woolworths Select drain cleaner, and safety matches - were Woolworths and rival Coles have faced significant scrutiny from the ACCC in recent years, including over the use of fuel vouchers at their petrol stations.

“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.”

Coles and Woolworths were repeatedly named by the regulator, which is concerned the supermarkets are limiting the ability of consumers to control their data.

Coles’ Flybuys and Woolworths Rewards automatically link customer debit and credit cards, enabling the supermarkets to track purchasing habits, even when consumers don’t scan their dedicated loyalty program cards.

“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,” Sims said.

A Woolworths spokesperson said the company will “carefully consider” the ACCC’s recommendations.

Coles to pay $5.25m to dairy farmers after failing to pass on drought levy

  Coles to pay $5.25m to dairy farmers after failing to pass on drought levy Coles will pay dairy farmers at least $5 million after the competition watchdog found the supermarket giant failed to pass on a drought levy on fresh milk. About 200 dairy farms will receive $10,000 each after the ACC threatened to take Coles to court for short-changing its own brand milk supplier since April. In March, Coles announced it would be increasing the price of its own milk by 10 cents per litre to raise money for drought-stricken farmers However complaints were made that Coles wasn’t paying farmers the amount it promised.The competition watchdog said farmers who missed out would be fully compensated.

Consumer watchdog calls for overhaul of loyalty schemes like frequent flyer and supermarket points Australian Competition and Consumer Commission reviewed loyalty schemes Shops are collecting their data by tracking credit card payments, report said The report recommended that Coles , Flybuys and Woolworths Group should end the practice of

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“We understand that simplicity, transparency, and data security are essential to customer trust in our program, and continually review and refine our privacy policies and data collection practices to this end,” the spokesperson said.

The average Australian carries four to six loyalty cards, the ACCC says, which means changes to the way these programs operate could have potentially wide-reaching ramifications for industries where their use is prevalent, including retail, hospitality and travel and accommodation.

Business practices the ACCC is concerned about:

  • The collection, use and disclosure of data in ways that don’t align with consumer preferences;
  • Making unilateral changes to terms and conditions in ways that are unfair to customers; and
  • Failing to present terms, conditions and privacy policies in a way consumers can understand.

Big data could stymie small disruptors

The ACCC began investigating loyalty schemes earlier this year amid a broader focus on what consumer and competition issues are being created by the emerging digital economy.

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  How big and small business alike use data for good — and for evil Businesses have always wanted to know as much as possible about you, but now they have the technology to collect, analyse and use that information.The catch is that to get their free hit of caffeine, students complete an online form, supplying their personal data, including name, phone numbers, e-mail, date of birth, study course, and professional interests. In return, they receive targeted advertising on their phones, tablets, and even from the baristas.

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The head of the Australian Competition and Consumer Commission , Rod Sims, will investigate the two retailers - which between them control an estimated 70 per cent of the nation's grocery spending - about potential breaches of the law and bullying tactics against food and grocery suppliers.

Businesses such as Woolworths, Coles, Qantas and others have been investing heavily in improving their ability to use big data to track customers, define actionable business insights and promote better loyalty.

But the ACCC says these practices raise a range of potential competition issues that could stymie the ability of disruptive, smaller firms from entering or otherwise operating in these markets.

“Loyalty schemes may be harmful to competition when they ‘lock up’ customers and introduce switching costs that increase barriers to entry and expansion for rival firms,” the ACCC said.

“If barriers are enduring and induce exit or deter entry, consumers are likely to be worse off.”

While competition concerns associated with big business loyalty programs are nothing new, the ACCC says data analytics capabilities are improving the ability of companies to use customer loyalty more effectively, which has implications for competition.

It said schemes with “large membership bases” could use the data they’re collecting to entrench their market position at the expense of smaller rivals.

“The ACCC will consider the competitive effects of loyalty schemes on a case-by-case basis in enforcement investigations; merger and authorisation decisions, including with respect to analysing any substantial market power held by a firm; and the height of barriers to entry in a market in competition law matters,” the ACCC said.

While loyalty schemes can also have pro-competitive effects on the markets they operate in, the ACCC said industries that are saturated with longstanding programs make it more difficult for new players to gain a foothold.

SmartCompany has contacted Coles for comment.

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