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community weblog

The Hook, The Hack, and the Hike

The Price of Loyalty: How Rewards Programs Trap Consumers... "Loyalty programs are everywhere: from airlines to the grocery store and gas station, companies are seeking your loyalty in exchange for discounts. These programs may look simple: collect your points, get some deals, and save some money. But as a new analysis (PDF) reveals, the reality is that many loyalty programs function as data-harvesting machines. These programs track what we buy, how we search, and even how we navigate our cursors across a screen – building hyper-detailed profiles that companies can use to gauge and direct how much each of us is willing to pay."
Another blurb from the authors (substack link) "The Loyalty Program Trap" (Related YT video)
posted by Saxon Kane on Dec 04, 2025 at 3:03 PM

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Companies extract deep insights into consumer behavior – including purchase patterns, how often they shop, and how much price pain they will tolerate – so they can experiment with rewards

The horror.

But seriously, you shouldn't be allowed to raise prices for loyalty customers. This hasn't happened to me, that I'm aware of, but I guess it does?
posted by MisantropicPainforest at 3:55 PM

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As a consumer, unless I have deep ethical qualms with my data being harvested (and used for some profiteering end), I don't observe any tangible disadvantage to using a free loyalty card scheme. I may receive small discounts on a select range of products and only save a relatively modest amount of money, but as the consequences of my decision are so far downstream and difficult to quantify, I can only - literally - afford to stick to my ethics if I have the money, and the willful effort to disengage from a system I'm complacently participating in.

As we have less disposable income as consumers, loyalty card schemes will keep being used to offer the illusion of lower prices in the short-term, only to ratchet them up over time as they find out how we think and act as consumers. They are absolutely a poisoned chalice.

If you're interested in a horrifically exploitative loyalty card scheme, look at Tesco. They are using AI to comb through customer data on a large scale whilst shoehorning everyone into using their 'Clubcard' for a discount where spending £150 yields a £1.50 voucher in return, and discounted products using the loyalty card are seemingly arbitrarily chosen and not remotely related to what a person spends as an individual. Tesco's profits continue to grow each year, as the bank balance of the average Brit keeps shrinking. They wallow in the rotten fruits of avarice as we become steadily poorer.
posted by Eldritchstigmata at 3:56 PM

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I stopped using them a while back because of the tracking. Maybe I am getting older and more paranoid. Maybe I'm just trying to keep a few things to myself. This is not the world any of us hoped for or expected.

It is annoying to pay a bit more for certain things. And I do understand the appeal. Once in a blue moon I will get them to get one discount and never sign up (Mariano's I got, recently. But never used it again). Anyway, in the grand scheme it doesn't even matter because someone has your info in any number of ways. Smart phone. Smart house. Do not like.
posted by Glinn at 4:12 PM

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This hasn't happened to me, that I'm aware of, but I guess it does?

I mean, it's profitable for them to offer the loyalty card program, so somehow they're getting more money out of you with the program than not.

I generally participate in them, but I consciously try to not shop at stores which have loyalty programs, because it's been obvious for years that they're exploitive. In some cases the game playing is very obvious (Kohl's, Michael's), and in many other cases it's cheaper to pay the premium. Back when Orchard Supply Hardware was a thing, I compared prices and found them to be 1.75% higher after then 2% loyalty program bonus than the local big box home improvement store, but if I need to drive 25 miles round trip to go to the next closest place, I've gotta save something pretty substantial to overcome the transportation costs.

But/and, something for those of us who advocate on privacy issues to to consider: the fact that they work means that privacy has negative value to your average consumer.
posted by straw at 4:15 PM

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A brief glimpse behind the curtain:

My day job is building "shopper loyalty infrastructure" for RetailMeNot. The software I help build figures out how much cash back people get when they redeem an offer from a store. I also helped build offer management tools the company uses behind the scenes.

Since we get paid by the merchants to process all those transactions and then pay the customers, we want as many people as possible to buy things they want.

Am I part of the problem with loyalty programs? Indirectly for sure. I just want to make sure that when someone buys a pair of shoes from a list and is promised $20 off they spent at least $100 they get their $20 as soon as possible (usually 45 days after the transaction).
posted by grmpyprogrammer at 4:17 PM

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As is so often the case, there's a relevant XKCD (at least regarding the creep factor if not the ratcheting).
posted by dick dale the vampire at 4:23 PM

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CVS thinks I'm an M&M addict, they email a 40% off one item coupon, I buy one single item on my walk, big bag lasts for several months, then another 40%.
posted by sammyo at 4:40 PM

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The only discount card i have is for the local grocery store. Been shopping there for years, the must have a heck of a file on Abe Lincoln, the name i used to sign up for the card.
posted by Marky at 4:41 PM

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They are using AI to comb through customer data on a large scale whilst shoehorning everyone into using their 'Clubcard' for a discount where spending £150 yields a £1.50 voucher in return

This has been how this worked for quite a while but in the last five years the major UK chains have all adopted a much more pernicious approach which is to have two prices on a huge fraction of their products, one with and without the loyalty card. If estimates having the card saves 10-15% typically on my weekly shop. Since my data is not worth that I would think then it seems likely they are charging an inflated price to anyone without a loyalty card and harvesting data for regular customers who realise how much it will cost to go without their card. Drop in consumers are getting shafted or end up with a deck of loyalty cards.
posted by biffa at 5:02 PM

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There are also legal risks to these programs. In addition to the article I linked I also remember a case (that I can't find online but may have been in California around the turn of the century) where a man fell in a supermarket and sued the store, which responded by using his loyalty program info to argue that he purchased a lot of alcohol and was therefore probably drunk when he fell.
posted by TedW at 5:04 PM

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The best loyalty reward I've ever encountered was at an Italian restaurant local to me. My wife and I became extremely regular customers there for a while, going there just about every week, and after a while of that they approached and gave us a discount card for 10% off everything we got there in the future. It wasn't something they advertised as being a thing - I think the only people who knew that they did this was the people who got given a card. No catches or tracking, and we didn't even really need to show the card most of the time because all the regular servers knew who we were. That felt pretty special, unlike the normal way that "loyalty" programs work.

We never got back into the habit of going there after the pandemic closures ended, and the last time we went they still honored the card, but it was clear from the server's comments that they hadn't handed out any of them for quite a while, so I don't think it's a thing they're still doing.
posted by vibratory manner of working at 5:06 PM

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Using your area code + 867-5309 still seems to work at many big chains that allow keypad vs. card entry for register discounts. I've been using it at Wegman's for years, hopefully helping to create a big blob of confusing data.

Even if they're just filtering it out, I'm still getting the discount.
posted by reedbird_hill at 5:08 PM

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Lol my mom's phone number has been my loyalty card number for forever. And she hasnt had that phone number in years!

Otherwise, without a loaylty card, I'm guessing they're still tracking in-store purchases when made by credit/debit card. So the only way to have privacy is with cash, which is always the winner for privacy and also probably why they (who?) wants to get rid of it so badly.
posted by LizBoBiz at 5:35 PM

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reedbird_hill: "Using your area code + 867-5309 still seems to work ..."

I will confess to doing this once people stopped having landlines. I'd go to the grocery store while visiting (say) my mother, or my in-laws, and instead of there being one good phone number to use, I had to guess which of the umpteen lines might be the one. So I gave up, and I was Jenny for that shopping trip. Fun side benefit - if you buy a sub at the deli counter, some stores have a "sub club" where every Nth sub is free.... so it was like the opposite of Russian Roulette at the self checkout - is today my day to cash in the free sub? Or am I sponsoring 1/N of somebody else's free sub? What a thrill!
posted by adekllny at 5:40 PM

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Using your area code + 867-5309 still seems to work at many big chains that allow keypad vs. card entry for register discounts.


I do this every time I go to Safeway. The other day one of the cashiers called me "Ken" because that is apparently the name on the account in my area code. I awkwardly acknowledged and now I'm mortified to wait in her line again.

I suspect that merely by entering a phone number I am granting them a license to cross-reference my credit card number so the privacy benefit of Jenny's number is probably moot.
posted by migurski at 5:43 PM

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I sign up for a new loyalty card whenever I go to a non-local grocery store and they ask if I am a member of their loyalty program. The interaction usually involves them handing me a card, and telling me to fill out form online. I check out and promptly lose the card.
posted by surlyben at 5:59 PM

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@migurski Next time just keep in mind that "ken" is a noun referring to one's range of perception, vision, or understanding. Perhaps that is what you are for the Safeway cashiers, for the price of a dime. Not to be confused with "zen." Cleanup on aisle one, with everything.
posted by Hot Pastrami! at 6:02 PM

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you shouldn't be allowed to raise prices for loyalty customers. This hasn't happened to me, that I'm aware of, but I guess it does?

I think it's likely to happen by not sending you a coupon that they send to someone else who fits their demographic but isn't in the loyalty program, or hasn't used their loyalty card in a while.
posted by smelendez at 6:22 PM

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Walmart customer claims he got an email asking him to rate a product he purchased with cash [reddit]
posted by glonous keming at 6:37 PM

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The cheeky teens in my area all use the phone number (696) 969-6969 at the local-but-Kroger-owned supermarkets

From the "total discounts saved this year" tally at the bottom of the receipt, a LOT of them use it and gets up into the 10's of thousands.

Its also good for gas discounts sometimes, so why not?
posted by BustedCatalyzer at 7:07 PM

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I mean, it's profitable for them to offer the loyalty card program, so somehow they're getting more money out of you with the program than not.

It's possible, probable even, that they lose money on a significant percentage of customers as long as they make it up on aggregate. Especially in the case of warm body, everyone qualifies retail cards.

My card use is basically to get the discount on shelf items of my regular grocery shop. I might switch brands if the price ends up being cheaper but I'd do that anyways. I don't use any apps for this so I don't get any offers besides what is displayed on the shelf. Oh, and I collect Canadian Tire money via the card but again just for my regular shop; the emails they send go right to the bit bucket and I don't use their app.

The lack of privacy is minimal because they are already getting that data via tracking my debit card.
posted by Mitheral at 8:28 PM

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I get a a little thrill of pleasure whenever some hapless cashier asks me if I have a loyalty card I want to use. I always say the same thing: "Nope! I'm good!" Because the deals are never as good as you think, and they make you a prisoner of desire.
posted by Doleful Creature at 10:12 PM

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My gas station mini mart clerks are playing a game of subverting the system one way until they get in trouble, then trying new ways. At first they just never mentioned the loyalty card. Then they got in trouble for a low % of transactions using a card. So then they taped a card on the counter to scan whenever anyone didn't have one or want one. Then (predictably) they learned they had to rotate through a stack of cards so it didn't look sus.

I take any card offered, use it once, then throw it away. But "they" probably aren't fooled by that, all those cards' data is probably just concatenated and listed under my cc number anyway.
posted by flestrin at 12:21 AM

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and harvesting data for regular customers who realise how much it will cost to go without their card

Also, the supermarket keeps the prospect of accumulating points towards as a voucher if you use a loyalty card, even if there aren't any specific products you will receive a discount on. That makes it easy to conclude that using the card is a sensible choice despite it not saving the customer any money during that transaction, because the (seemingly free) incremental gains of money feel worth making.
posted by Eldritchstigmata at 1:56 AM

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Of course they're harvesting and using the data. How else will they manage to be so spookily accurate that they have to fuzz the results in targeted advertising?. (I think there was an FPP about this article but I can't trivially find it.)
posted by rmd1023 at 5:54 AM

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I do most of my shopping at Aldi (no loyalty program) and Kroger (I use my deceased mother's account). I do wonder, though, how much of the same data can be tracked using our credit cards. Unless you're paying with folding money, your credit card number is attached to each purchase, and it seems they could build their models off that just as easily as from your loyalty club card.
posted by workerant at 5:57 AM

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Multiple people can use the same CC, people can pay with cash or Apple Pay, one person can have multiple CCs, CC numbers change over time, they need to be stored in a different way than a loyalty card, etc.
posted by MisantropicPainforest at 6:03 AM

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The loyalty card and points are to get you to go to that store, instead of the one across the street. So that's why they offer discounts.

I always thing the doomsaying is kinda silly - first many people who use loyalty cards know exactly how much grocery products cost, and since there is another store across the street (often literally) they know where to go to get the best deals. So they know pretty well if using the card at location X is a good deal or not.

IMO the grocery stores often bundle discount products that one otherwise wouldn't buy (ie: you must buy 5 by X brand to get a price cut) and other deals that increase total spend vs increasing prices on individual products.

I also disagree that these programs are good at individualizing - I've worked on projects like that before - the problem is the big companies don't care (they aren't going to individually market Coke to you) and the small ones can't afford it. Not that there are outliers- IMO political targeting can be done but those guys have deep pockets for playing a long game, not expecting an immediate return like corporations do.
posted by The_Vegetables at 7:59 AM

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Check Netflix buying Warner Brothers today- all that tech focused on tailoring their content to exactly what customers want pales in comparison to just buying the rights to a bunch of things that are already popular and showing them.
posted by The_Vegetables at 8:05 AM

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(I think there was an FPP about this article but I can't trivially find it.)

Here you go
posted by TedW at 10:18 AM

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Ugh. I hate these things, turn them down whenever, and really truly believe they don't save you a lot of money. My husband uses a Fred Mayer reward card for gas. That's usually 2-3 cents off a gallon, so .75 for a tankful. Frankly, it's not worth driving across town to fill up 3/4 a tank. All well and good, but we usually don't shop there for anything else, and I have unsubscribed to their emails.

I just get pissed when I think about 'rewards'--don't offer me a pissy reward card, just give me better prices, and then I'll be a faithful customer. Right now the main thing that turns me off is those miserable texts asking how was your experience? Just fine until corporate started wasting my time on your crap! I'm rereading the Murderbot series. We're darn close living in the Corporate Rim.
posted by BlueHorse at 10:22 AM

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I do wonder, though, how much of the same data can be tracked using our credit cards.

I can confirm out of personal experience that your purchases at Whole Foods show up in your Amazon account history.
posted by Eikonaut at 3:10 PM

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Multiple people can use the same CC, people can pay with cash or Apple Pay, one person can have multiple CCs, CC numbers change over time, they need to be stored in a different way than a loyalty card, etc.

With the exception of pay with apple pay/cash all these things apply to loyalty cards and if you are so inclined are much easier to game. The code to key by credit/debit card number is 1st year DB level. And probably less noisy because people are some what motivated to to maintain the accuracy of data CC personal data. Whereas my triangle card to collect Canadian Tire Money I got when they stopped handing out actual money and I've moved at least twice since then. They send me emails that I don't open and it might have a phone number associated with it that goes to a land line that doesn't exist. And they hand the cards out for no charge so if one wanted you can switch at a moments notice. Redeeming the cash doesn't even have a threshold so you could in theory get a new card every trip.

Like I use a loyalty program card (SCENE at Safeway) but it isn't my loyalty card just a picture on my phone. I think it's my spouse's but besides them and myself our daughter and her boyfriend also use that card. Good luck getting anything but noisy data out of that. One of the local supermarkets (SaveOn) has some sort of loyalty card but as I only shop there maybe twice a year I just get a new card every time I go in.
posted by Mitheral at 6:50 PM

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Well thanks to this thread I used 867-5309 at CVS instead of a friend's number and it worked, so thank you and I'll try that everywhere else. I did get approximately one million coupons on the receipt since I assume the number is used a ton.
posted by jeweled accumulation at 7:35 PM

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I used my rewards number at Safeway last night and got 3 dollars off of a total of over 200 dollars. 1.5% doesn't even seem worth the effort of keying in my number, much less compensation for the marketing data I'm providing.
posted by flestrin at 3:18 PM

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