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Retail Rewards: How Much is Your Privacy Worth?

Recently, I read an interesting article on Yahoo! Finance provided by The Wall Street Journal [3]. The article detailed the huge success of retail loyalty rewards programs. Tens of millions of consumers belong to these programs. Usually, you sign up for free, and have a barcode scanned, or your phone number entered, every time you go shopping. These programs reward you with coupons, sneak peeks, “secret” sales and other perks that usually results in discounts.

After reading the article, I went through my purse. I belong to a number of loyalty programs [4]. One program allows me to get a discount on gas when I make purchases at my favorite grocery store. I also belong to a rewards program that sends me a $5 off coupon every time I spend $250 at the store. Since I shop there regularly anyway, this works out. I also belong to rewards programs at department stores and book stores. But is it really worth it? Sure, I get discounts, but what am I giving up in terms of privacy?

Retail Rewards: Tracking Your Every Purchase

Once you sign up for one of these rewards programs, you can then be tracked. Information about your purchases can easily be saved, catalogued and used to present you with offers that are more targeted. This helps increase retailers’ bottom lines, but it could also potentially be used for other purposes. What happens if information about your purchases starts getting reported to credit bureaus? Could your credit report begin reflecting your latest splurge?

While that is probably a bit on the alarmist side, the truth is that we are being tracked regularly — and we signed up for it. On top of that, what if the retailer sells your information to someone else? It’s a good idea to read the fine print on the program agreement you sign. Understanding the privacy policy is important if you are serious about limiting what information others have about you.

What About Identity Theft?

For me, one of the concerns is identity theft. The recent PlayStaion Network breach affected us. We ended up canceling the card that was on file with the PSN. We also received, by mail, an attempt to scam us. There is a surprising amount that can be done when someone gets a hold of your name, address, phone number and email address. You can easily begin receiving all sorts of phishing attempts and other undesirable attempts at scamming.

On top of that, what if someone opens an account using your name and address? While they might not be able to get a hold of a credit card without your Social Security number, they could start going to the gym with your name, or set up some services in your name. My parents once had utilities in Florida set up in their names — and they live more than 2,000 miles away from Florida! Identity theft [5] is becoming more common, and the more places that have personal information, the greater the chance of being a victim.

You never know when a database is going to be hacked, turning over your personal information to someone unscrupulous. While it’s nice to get the discounts, before you sign up and start giving away your personal information, it’s a good idea to consider that you might be giving away more than you thought.