California Announces They’re Regulating Travel Loyalty Programs

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:

  1. Summarize benefits
  2. Describe program terms and the value of the customer’s data
  3. Explain how to join the program
  4. Explain how to leave the program
  5. 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)

About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community InsideFlyer.com, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

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Comments

  1. It sounds as if the regulation is not of the program itself but of the program’s use of personal information. In other scenarios in which Federal regulation is exclusive, the States still have the right to pursue enforcement of (say) claims of fraud.

  2. Nothing good can come out of this. Just like they have programs to protect golem buyers in cali that end up being one sided for the builders. The cali oversight just lets the builder say ‘I am using a standard contract’, even if the shit in it is really bad.

  3. Given that California is probably one of the least business and consumer friendly states right now, consumers will pay the price.

  4. Nothing good will come from this, you can be sure of that. Sadly, what the government must do it typically does poorly. I realized this as I stood in line to get my Real ID at the DMV on a cold, early Saturday when they kept us all outside until we were called…slowly. Imagine a private business that kept their customers outside waiting in the cold, rain or snow ….that business would be gone quickly so there is an incentive to make sure that doesn’t happen!! What’s worse is when government meddles in an otherwise good business or program to make it ‘better’ for some customers.

  5. Mark Rascio says: “Imagine a private business that kept their customers outside waiting in the cold, rain or snow ….that business would be gone quickly”

    Like the Apple Store on iPhone launch day?

  6. Consumer data is always more important and valuable to companies than the program itself. And it’s about transparency to the consumer than an amendment or modification to any program. The airlines have done enough to devalue “loyalty” all on their own. But you conservatives love to cry foul while on your knees for corporations.

  7. These requirements, which basically do nothing, will take <10 hours for an airline to come up with and put on their website, they aren't going to litigate over this.

  8. Very pleased to hear that our politicians and Bureaucrats in Sacramento now have another useless task to add to their workday. What would it take to get government actually WORKING to support us instead of thinking up idiotic duties that produce nothing but more expenditures without results?

  9. I guess the ‘list’ of companies and industries to go after in California is getting pretty thin at this point to justify these government positions’ existence…so here we are. Every year that passes makes me happier and happier I got out of there.

  10. Seems like a reasonable regulation to me- not really for the big loyalty programs, but as everyone and their brother rolls out something, it’s probably good to have standards. For me, an easy way to get out is a win- I’ve signed up for some things and regretted it later as I spent a long time trying to opt out again.

  11. Maybe they should focus instead on why people fleeing the state, cleaning up the homeless camps, and the shit off their sidewalks.

  12. I don’t trust the State Government motive behind this new reg! Nothing good for taxpayers will come of it!

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