Consumer Reports: The real price of store loyalty programs

LAS VEGAS, Nev. (CONSUMER REPORTS) - They promise discounts on gas, groceries, and more — but at what cost? Retail loyalty programs offer tempting perks yet often come with a hidden price: your privacy. A new Consumer Reports investigation reveals one retailer pushing the limits, raising questions about how much personal information consumers are giving up — and who might follow their lead.

Signing up for a store loyalty program can unlock big savings — digital coupons tailored just for you, discounts at the pump, even important safety alerts about product recalls. For many shoppers, it feels like a no-brainer.

“So, there’s a price for those perks and it’s usually your information,” says Derek Kravitz is an investigative reporter with Consumer Reports. He says, “Store chains often collect your name, home address, email address, and phone number. Then study what’s in your grocery cart. Many retailers do this, but Kroger, one of the largest grocery chains in the U.S., is doing it in a much bigger, profitable way.”

A Consumer Reports investigation found Kroger collects and analyzes shopper data in highly sophisticated ways by tracking your purchases, building detailed profiles, and turning that data into profit. Kroger not only uses the information internally — it also sells it to third parties for targeted marketing and ads.

Last year alone, its “precision marketing” arm generated an estimated $527 million. The company’s so-called “alternative profit” ventures now make up more than 35% of its net income.

And what about the data Kroger is collecting? How accurate is it? Consumer Reports obtained shopper profiles from Oregon — one of the few states where consumers can legally access that kind of data. CR looked at the profiles. A lot of them were inaccurate about gender, age, how many people are in their household, their income, their education level.

In a statement to Consumer Reports, a Kroger spokesperson said, “demographic data can be helpful to filter our audiences so that Kroger customers are presented with relevant coupons, promotions, and other discounts or offers … Because we don’t rely on demographic data that we source from data enrichment providers, we do not affirmatively correct it.”

Kroger consumers can ask the company to correct their profile. To limit how your data is used, look for the company’s “How We Use Your Data” or “Privacy” policy online. It should say what information is collected and how you can opt out of certain tracking and marketing practices.

Currently, 15 states have laws that give you the right to access the data companies collect about you and in many cases, correct it, delete it, or opt out of its sale. More states are set to adopt similar privacy protections next year.

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