So called loyalty programs should be illegal on multiple fronts,
- Privacy: There's obvious tracking of purchasing trends. This derails into selling user data to everyone that makes people increasingly easy to track.
- Customer-dependent pricing / Price-discrimination: This is awful for economy, in econ 101 you learn that business want to charge each customer as much as they are willing to pay, but this differentiated pricing is just getting their hands into everyone's pockets.The free market principles rely on perfect knowledge, and every step made to make pricing harder is an attack against self market regulation.
Price discrimination is not a priori bad. A fixed price with enough margin to support the business may be too high for price sensitive consumers. If you can charge more to less price sensitive consumers, you can, at the margin, make a little bit on these price sensitive consumers, and overall everyone is better off - more consumers are satisfied and their marginal willingness to consume a unit of the thing being sold is more equalized.
Yes, this is the reason why it's sort of illegal, but done anyways.
Honestly, beyond paying fewer fees on the bus as a kid, I'm pretty sure I'm being scammed everytime I experience price discrimination.
I feel it's easier to make it illegal and give away reasonable credits to all consumers. I wouldn't discriminate in credits either, I'd rather have public transportation being free for all than claim to save money that society needs to spend anyway.
It doesn't help that lying about the price at any point just makes accounting harder, and creates space for wrong, uncompetitive pricing, or awful deals that would hurt business and society in the longer term anyway.
pricing is all made up to begin with though. your can't take the cost to make an item, add a reasonable amount of profit and that's the "real" price. that's just not the reality of running a successful business. human psychology is far too complicated.
at the end of the day, prices are just a number you make up, and hopefully it's a big enough number that your stay in business. hopefully it's a big enough number that you get rich. but sometimes it's a fire sale and you just end up owing less money to your vendors.
> at the end of the day, prices are just a number you make up, and hopefully it's a big enough number that your stay in business.
The only requirement is to make up a single for all your customers that are getting the same thing back. It'll be made up and account for business factors like risks, profits, etc.
I don't think everyone is better off, at best the "less price sensitive" is unaffected. But then you have to have have some way of stopping arbitrage via the customers paying the lower price through some sort of identity checks or restrictions. I think that's an unavoidable negative outcome and it's not clear that it would always be outweighed by allowing more people to consume the product.
There are ways to adequately approximate that kind of price discrimination without detailed tracking though, like giving discounts to students, seniors, and people receiving various kinds of welfare benefit upon showing proof of status.
Yeah it isn’t as accurate as the privacy-invasive kind of tracking, since students and seniors can be wealthy and eligibility for welfare benefits doesn’t always consider assets or gifts from well-off family. But it’s accurate enough to give the economy most of the same benefit without the privacy downside.
I do think it’s fine for people to opt in to more tracking as a separate consent choice beyond merely participating in a loyalty program, for example to get more personalized and therefore more useful offers, but not as a condition of participation to merely receive at least standard offers and accumulate points. That’s how they generally work in Germany.
>I do think it’s fine for people to opt in to more tracking as a separate consent choice beyond merely participating in a loyalty program, for example to get more personalized and therefore more useful offers, but not as a condition of participation to merely receive at least standard offers and accumulate points. That’s how they generally work in Germany.
Sounds like that'll push retailers to switch from a system where they give points/discounts to everyone, to one where points/discounts are "targeted", which of course requires opting into tracking. Like I said before, the whole premise of loyalty programs is that you're being tracked in exchange for rewards. You really can't expect to have your cake (discounts) and eat it too (not being tracked).
my grandmother collected green stamps from the grocery store, which she saved for food discounts.. I don't think that there was any customer ID involved at all..
honestly, describing pervasive tracking of purchasing associated with govt ID as "normal" is .. its a sickness and parts of it are illegal now. It is not required or "normal" at all, from this view
> Sounds like that'll push retailers to switch from a system where they give points/discounts to everyone, to one where points/discounts are "targeted", which of course requires opting into tracking. Like I said before, the whole premise of loyalty programs is that you're being tracked in exchange for rewards. You really can't expect to have your cake (discounts) and eat it too (not being tracked).
As I said, in Germany you can indeed have your cake and eat it too in this regard, if you’re okay with the offers you receive being less targeted and therefore less appealing.
My understanding is that GDPR requires them to offer the option to decline the personalized targeting without being blocked from participation overall, and this is probably the same anywhere in the EU. But I don’t have personal experience with this in other EU countries and could be misunderstanding.
>As I said, in Germany you can indeed have your cake and eat it too in this regard, if you’re okay with the offers you receive being less targeted and therefore less appealing.
The "cake" in this case refers to the offers you had before GDPR came into effect and/or regulators started enforcing it. They might give opt-out people some token offers to appease regulators, but I doubt it'll be anywhere close to the offers they had before.
> They might give opt-out people some token offers to appease regulators
It’s not an opt-out situation. As per GDPR requirements, these programs have a specific opt-in prompt for personalized targeting, separate from the one which is for generally collecting and redeeming points as a member, and it’s not pre-chosen by default.
I think one can assume that many people will decline to opt in, especially in a culturally privacy-focused country like modern Germany and since not opting in is far behaviorally common than explicitly opting out, but also that many others will knowingly consent in exchange for the benefits. So I think they would generally want to give decent offers to both categories of people, since the non-consent group is large enough to matter. Of course the personalized ones would be better, otherwise nobody would want to give that consent.
Myself, I’ve consented to some but not all of the personalized targeting and information sharing from the loyalty programs I participate in here, after reading the descriptions of the requested consents in detail and making a conscious choice. In at least one case I converted a no to a yes after thinking about it longer. It’s good to have that transparency and control, and not to have the legalese surreptitiously remove your right to sue the store should that become necessary as is common in the US (forced arbitration is generally illegal here in B2C agreements).
As for the rest of your most recent comment, I wouldn’t know; I didn’t ever live in Europe before the GDPR.
- Privacy: There's obvious tracking of purchasing trends. This derails into selling user data to everyone that makes people increasingly easy to track.
- Customer-dependent pricing / Price-discrimination: This is awful for economy, in econ 101 you learn that business want to charge each customer as much as they are willing to pay, but this differentiated pricing is just getting their hands into everyone's pockets.The free market principles rely on perfect knowledge, and every step made to make pricing harder is an attack against self market regulation.
Price discrimination is illegal even in Lobby-land, https://www.law.cornell.edu/uscode/text/15/13