Do Loyalty Cards Compromise Your Privacy?

By Kim Boatman

If you want the best deals at your local grocery store, chances are you’ll need to sign up for a frequent shopper card. It’s a club most of us join without thinking twice.

And while that free electronic card gives you access to storewide discounts, it also does much more, caution privacy experts. “These cards are used by companies to increase cardholder spending and loyalty,” explains attorney Aaron Messing, whose practice with OlenderFeldman LLP focuses on privacy issues. “Companies use the information they gather, play with the data and see to what extent they can modify consumer behavior. The biggest issue from a consumer perspective is you have no ability to determine what information is being collected and how it is being used and shared.”

Concerns About Frequent Shopper Data Collection

Some uses of your shopping information can seem innocuous enough. Buy a couple of cartons of Greek yogurt and you might receive a targeted coupon for another brand of yogurt. But what if a company decides to sell or share data of a more personal nature? asks Messing. “You wouldn’t want your employer to know about your alcohol purchases, or your health insurance company to know about your cigarette purchases,” he cautions.

Most of us think our purchases aren’t significant enough to be of interest to others, so we often don’t bother reading the privacy policies attached to frequent shopping cards, say the experts. In some instances, state laws might restrict what information a store can gather and share. But most consumers don’t stop to think about possible uses of the data. In one instance, a firefighter was accused of arson based on purchase records showing he had bought a fire starter, says Messing.

In another legal case, a store used a customer’s record of beer purchases to defend itself from a lawsuit brought by the customer, who had fallen in the store, says Robert Ellis Smith, publisher of Privacy Journal. In a well-publicized situation, a father found out about his teenage daughter’s pregnancy when she received baby-related coupons in the mail after purchasing early-pregnancy products from a large chain store.

Steps You Can Take to Protect Your Information

For most consumers, it’s a matter of weighing the cost of the intrusion against the discounts you receive. If you do use frequent shopper cards, you can still take smart steps to safeguard your privacy, say the experts. Consider these tips:

  • Use the manager’s card. Smith doesn’t think it’s worth sharing his personal data. “I can easily get the savings by simply asking the cashier to ring in his card or the manager’s card,” he says.
  • Be careful what you share. Never include your social security number on a card application, advises Smith. “If you value your phone number, list one other than your home phone number. I would recommend against putting your children’s names or ages.” One grocery store chain asks for a driver’s license number on its frequent shopper application. You can always decline to give information or leave part of an application blank and see if the company still provides the card.
  • Consider giving non-identifying information. “I usually advise against providing false information -- especially in insurance, government or employment forms,” says Smith. “Stores don’t seem to mind false information, though. It’s not a lie to call yourself by a nickname.” However, some companies might have terms that prohibit false information, says Messing, so read the terms before you sign up.
  • Create a secondary email address. If a form asks you for an email address, create a free secondary account that you use just for club memberships and the like.

“Generally speaking, what you need to do is determine how comfortable you would be with everyone in the world having this information,” says Messing. “You’re not receiving these benefits for free. There is a price to be paid for it. This information is not being kept in a vacuum.”

Kim Boatman  is a Silicon Valley, Calif., journalist who writes about security and technology. She spent more than 15 years writing about a variety of topics for the San Jose Mercury News.


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