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OFT to probe loyalty cards

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Retailers which offer personalised online offers through data collection via loyalty card schemes are to be investigated by the Office of Fair Trading (OFT), it has been announced.

Grocers and retailers such as Tesco and Sainsbury’s use loyalty schemes to target customers by collecting and analysing details of their online shopping habits and the OFT has launched a call for information to determine to what extent these consumers are being monitored.

Retailers can study the websites visited by shoppers, the products they have browsed and even which type of device and internet browser they are using and the watchdog is set to explore whether any action is necessary.

Looking at how businesses use such information and whether individual pricing is offered as a result, the study follows on from Government discussions of ‘midata’which has been proposed following concerns of the huge amount of information that companies are able to access about their customers and would allow the public access to their own data quickly and easily.

Consumer understanding of how their own data is used is key to the OFT’s work, and the group will also study and consider in what way the technological advancements of the online shopping market have affected consumers.

“Innovation online is an important driver of economic growth,” explained OFT CEO Clive Maxwell.

“Our call for information forms part of our ongoing commitment to build trust in online shopping so that consumers can be confident that businesses are treating them fairly.”

During the course of the study, the OFT will be working in collaboration with a number of its international counterparts such as the US Federal Trade Commission.

Gathering information over the next six months, the watchdog will publish its findings in Spring next year and is eager to speak to online retailers and software providers who may be able to offer insight into their practices.

Maxwell said that, while it is widely accepted that individual data is used for marketing purposes, businesses must be more open about their strategies and how these can benefit consumers themselves.

He commented: “The ways in which data is collected and used is evolving rapidly.

“It is important we understand what control shoppers have over their profile and whether firms are using shoppers’ profiles to charge different prices for goods or services.

“This call for information will help us understand these practices better and to decide whether or not this is an issue on which the OFT needs to take any action.”

Published on Friday 16 November by Editorial Assistant

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