The State of California is putting loyalty programs on notice that provisions of the California Consumer Privacy Act dealing with ‘financial incentives’ apply to them, and they’re being given 30 days to come into compliance with the law. The state is specifically calling out travel loyalty programs for enforcement, along with retail, home improvement, and the food service industry.
Under the CCPA, businesses that offer financial incentives, such as discounts, free items, and other rewards, in exchange for personal information must provide consumers with a notice of financial incentive. This notice must clearly describe the material terms of the financial incentive program to the consumer before they opt in to the program. Letters were sent today to major corporations in the retail, home improvement, travel, and food service industries, who have 30 days to cure and come into compliance with the law.
These programs collect data and even offline collection of data is subject to California regulation under the Act, the state says. And Cal. Code Regs.. tit. 11, Section 999.301(j) covers “a program, benefit, or other offering, including payment to consumers, related to the collection, deletion, or sale of personal information.”
Loyalty marketers argued they were offering rewards for repeat business rather than in exchange for personal information and therefore shouldn’t be covered by the Act.
So how does California propose to protect loyalty program members? By requiring programs to:
- Summarize benefits
- Describe program terms and the value of the customer’s data
- Explain how to join the program
- Explain how to leave the program
- Explain how the value of the benefit relates to the value of the customer’s data
While my prurient interest would love to see airline and hotel programs required to disclose “a good-faith estimate of the value of the consumer’s data” and “description of the method..used to calculate the value of the consumer’s data” it’s non-obvious how travel loyalty program members benefit.
And offering a notice prior to opting into the program just changes the signup page (or page where there’s a check box in the booking path).
However it’s not clear that this is even legal with respect to airlines where the Supreme Court has clearly stated that the Airline Deregulation Act’s federal pre-emption trumps state regulation of frequent flyer programs (Northwest v Ginsburg).
(HT: Steve A)