A new report from a consumer advocacy group calls for greater oversight of the loyalty programs that credit card companies and banks use to entice customers.
The report released Wednesday from the Public Interest Advocacy Centre (PIAC) says that consumers need more protection when it comes to these loyalty programs, which, it says, are often a primary factor in consumers deciding between credit cards. These programs are a significant revenue generator for banks, and consumers are exchanging valuable personal data about their spending habits for these loyalty rewards, the report notes.
Yet, it says that there is little in the way of consumer protection where these programs are concerned. For example, the report points out that consumers have little recourse when loyalty program providers unilaterally decide to devalue their loyalty currency, or change the terms and conditions of these programs.
As a result, it recommends that industry-wide guidelines be introduced relating to loyalty currency devaluation. It also recommends that there should be a complaints body for consumers on issues relating to loyalty programs; that there should be guidelines regarding the notice required when the terms of loyalty programs are changed, and covering the handling of consumer data after they withdraw from a loyalty program.
It also says there should be standards governing the transfer of loyalty program currency; that the Financial Consumer Agency of Canada (FCAC), or other federal agency, should be assigned to evaluate and rate credit card vehicles associated with loyalty programs; and that loyalty program operations should be covered by the Financial Consumer Code of Conduct that was announced in the last federal budget.
“PIAC is calling on policy makers to define ‘loyalty currency’ as a form of non-cash payment, with the intention of having loyalty currency enjoy protections similar to other forms of payment under the payments system in Canada,” said John Lawford, executive director of the PIAC.