When you're stacking up grocery items at the checkout line, you're probably not worried about whether your supermarket chain is compiling a profile of you based on what you buy, and storing that information for its own use. After all, who cares if you buy one brand of tissues over another, or favor name-brand microwave pizzas over store brands?
Supermarket chains care. So does CVS. So much so that they use discount cards (referred to as "membership" or "loyalty" cards) to offer you what seem like great bargains. They use the cards to keep tabs on what you purchase, how often you shop, and what your buying preferences are.
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.
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.
"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 recent news that CVS ExtraCare card users' information was exposed on the company's Web site illustrates the risks that loyalty card programs entail. The question then becomes, what is more important -- saving money or protecting your privacy?
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 card users enjoy discounted prices, special coupon offers, and rebates or "points" towards airline tickets or shopping sprees, much like credit cards. In addition, many loyalty card programs offer tangible benefits such as CVS's plan to designate pharmaceuticals purchased with their card as qualifying for medical Flexible Spending Accounts (FSA's), or the Upromise plan, which allocates portions of money spent using participating stores' loyalty cards to your children's 529 college savings account.
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?
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."
However, many shoppers are increasingly aware that loyalty cards are being used to compile profiles of their shopping habits for later use, and that this data can be farmed out to business partners, telemarketers, and direct-mail solicitors. What isn't public knowledge, however, is how often discount card programs themselves are outsourced to other companies.So, it is entirely up to you use any loyalty card.
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