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A Swipe at Store Loyalty Cards

Retailers invite their customers to save money on groceries or electronics, as long as they carry the store's preferred customer card.

More and more shoppers are getting the cards, called consumer loyalty cards. But in exchange for discounts, they give stores their name, address and other personal information. Then supermarkets and big-box stores can track their purchasing history -- and learn a lot about them in the process. In the lingo of privacy experts, it's called data-mining.

Del. Saqib Ali, a Montgomery County Democrat, said he plans to file legislation today that would make Maryland the third state, after California and Connecticut, to curtail the practice.

"I'm frankly very concerned about the information that's out there for commercial interests," said Ali, a freshman and the General Assembly's only software engineer. "I think Maryland should be in a leadership position on this."

His bill would prohibit retailers from sharing or selling personal or marketing information about consumers. Violators would be charged with deceptive trade practices.

Lisa Rein

By Phyllis Jordan  |  February 5, 2007; 6:12 AM ET
Categories:  General Assembly  
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Comments

Does this proposal involve curtailing the cards or just the info sharing. I happen to like my loyalty cards and really don't believe whether or not I buy maxwell house or folgers is a matter of national security.

Posted by: evan | February 5, 2007 7:26 AM | Report abuse

I always enter a faux name and address when I register for the cards.

They are interested in buying patterns and things like how coupons entice people. More power to them - I don't care if they see what I buy.

But they don't need to know who I am.

Posted by: John Q. Public | February 5, 2007 8:43 AM | Report abuse

fast forward to a day in the future (hopefully the far-off future) - mom arrested when analysis of buying habits shows purchase of trans fat laden products that led to childs weight problem...

Posted by: jj | February 5, 2007 8:52 AM | Report abuse

It won't restrict the use of the cards, just prevent companies from selling the information gathered.

Posted by: Jason | February 5, 2007 9:39 AM | Report abuse

I think that's reasonable.

Sometimes the tracking is an advantage. When I shop on Peapod they bring up my grocery purchases from trips to the store. Since I buy the same boring things over and over it makes shopping online easier.

Drugstore.com and CVS can spit out end of year statements with things I've bought that qualify for my flexible spending account. Since I'm no good with receipts that creates an incentive for me to buy those things there.

Posted by: RoseG | February 5, 2007 9:55 AM | Report abuse

In California, a man fell in a grocery store. When we threatened to sue, the grocery chain came up with a report of how his loyalty card showed that he bought beer twice a week. They used it to try to paint a picture that he was drunk when he fell in the store.

I won't give up my privacy to save 75 cents on a box of Bisquick.

Posted by: daninannapolis | February 5, 2007 10:02 AM | Report abuse

For Evan. Unless you pay with cash every time you use your card, as soon as you give then your credit card and your loyalty card they know who you are, and they combine that data.

Posted by: JJ | February 5, 2007 10:21 AM | Report abuse

This cat's long out of the bag and the so-called "privacy" fight is over. The proposed law is just meddlesome nonsence designed to look like the legislature is taking a principled stand.

Posted by: mart | February 5, 2007 10:24 AM | Report abuse

Why should my grocery prices be jacked up by some drunk who trips over his own feet in a stupor in a grocery store?

Posted by: Big appetite | February 5, 2007 11:08 AM | Report abuse

I'm all for prohibiting sharing or selling the info--or at least offering an opt-out clause. Don't want the store to have your info? Don't sign up for the card.

Posted by: mizbinkley | February 5, 2007 11:08 AM | Report abuse

quote-It won't restrict the use of the cards, just prevent companies from selling the information gathered.-end quote.

These cards and the data they generate serve an important purpose which in the long run is beneficial to both business interests and communities. By providing detailed breakdowns of buying patterns in various zip codes and communities, they can help guide intelligent commercial development.

This is especially important in urban areas, where much commercial and other economic activity is not tracked by traditional indicators like banking relationships and consumer credit. The info may help some retailers and other business see investment opportunities in areas that otherwise look unattractive.

Increased retail and other commercial investment can add significantly to the quality of life and economic base of communities that would otherwise be ignored. Political grandstanding on the use of data mining, in the name of privacy, is counter to the public interest and frankly helps no one.

Posted by: Data is good | February 5, 2007 12:05 PM | Report abuse

I totally do not like those cards. Don't like being "forced" to give my personal info to get the best price.. Kudo's to CVS who doesn't "force" you to get a card to get the sale prices.

Plus, My wallet is full enough. Make these cards stop!

Posted by: C.W. | February 5, 2007 12:06 PM | Report abuse

For C.W. Actually CVS does have loyalty cards and their sale prices are for cardholders only...

Posted by: bmolten | February 5, 2007 12:20 PM | Report abuse

I agree with the person who said that if you don't like them, don't use them - and pay cash. If you really need a discount, give them an alias. Personally, I don't really care if Giant knows I buy certain items. As a matter of fact, I want them to know what I buy, because as a regular customer, they will stock what I want to purchase. I can't think of anything I buy there that needs to be considered personal and confidential. The only thing would be my prescriptions, and they already track those without the loyalty cards.

Posted by: Lori | February 5, 2007 12:33 PM | Report abuse


I would just like to clarify a few points for those who may be concerned:

1) This bill does in no way prevent retailers from issuing "customer loyalty cards", tracking their customers purchasing habits or targetting/customizing advertising to the customer. What the bill does is PREVENT them from selling or transferring this information to a third party (such as large commercial data warehouses like Lexis-Nexis or ChoicePoint).

2) This bill also establishes a consumer's "right to inquiry". IE: A consumer may request to see the purchasing history that the retailer has compiled about him/her. Once this request is received the retailer must respond in writing within 30 days and may charge a fee not to exceed $5 for this service. (This is completely analogous to requesting a credit report from a credit reporting agency)

3) This bill only applies to retailers that have over 50 employees.


I am a Software Engineer. I have first-hand experience working for companies that do large scale data-mining. I have seen the large amount and personal nature of information that is commercially available. And I'm concerned about the risk to Maryland's consumers' information security and privacy.

This is a common-sense bill that should be passed into law.

Posted by: Delegate Saqib Ali | February 5, 2007 1:08 PM | Report abuse

THe only thing they'll learn about me is that I use a lot of coupons, am very brand loyal, BUT if they jack the prices of said brand up too high, I will stop buying and, maybe stop buying at THEIR store......

Posted by: jesabol | February 5, 2007 1:17 PM | Report abuse

CW, don't like all the cards - use this http://www.justoneclubcard.com/

I do. It's great.

Posted by: Anonymous | February 5, 2007 1:50 PM | Report abuse

I can think of a lot of things that are bought at a grocery store that people might consider personal / confidential.

Medicines...

People who are not concerned about this are asleep at the switch, and as a society we should default to protecting privacy. Sure YOU might not mind it, and you might never have an issue, but once the cat is out of the bag it is too late. I think responsible legislation is a must, with regards to tracking consumers habits.

People think that this is saving them money, but in fact it is NOT. Companies use this information to determine how much more they can charge you, and the charge an additional markup to people who opt not to use their system.

Here is an interesting example, the website orbitz: you go there to get a good deal on plane tickets. You have to sign-up to buy the tickets and they track your purchases. After you have used the service for a while, they get a sense for your buying habits and price points. You sign in and the 'deal' you are getting is actually more expensive than the 'deal' offered to a brand new user. You can test this by searching for tickets with two different browsers signed in with different users. You will see different prices on many flights.

So please don't be naive and think that this is useful to the consumer, companies track your information to figure out how to get more money from you. There is no altruistic customer service concept behind these ploys.

I know, because I have done work for credit card companies and "smart card" developers. I have been in meetings and heard their ideas, and I think that we need the government to protect us for business entities that capture, store, and use information about us with out our express consent or protection in mind.

Posted by: greg | February 5, 2007 2:13 PM | Report abuse

Jesabol,

That's great. If they scan my purchasing history, they won't find anything exciting either. But sometimes people buy very personal items such as personal hygiene, contraceptives, cigarettes, alcohol, anti-itch creams, etc.

I wouldn't want ANY of my purchasing history being sold to a data-mining warehouse that could then turn around and sell it to anyone -- including a prospective employer who might refuse to hire me based on my purchasing history.


Posted by: Delegate Saqib Ali | February 5, 2007 2:23 PM | Report abuse

"For C.W. Actually CVS does have loyalty cards and their sale prices are for cardholders only..."

Actually, there's a blue coutresy card at the registers that employees can use if you don't have a CVS card and still want the "sale" prices. Or if your friend, mom, dad, aunt, etc. has one, use their phone number. You still get the discount and they get the points!

Posted by: Former CVS Emp. | February 5, 2007 3:01 PM | Report abuse

Delegate Saqib Ali,

Despite what others on this blog have said, I agree with your proposed law. I have never liked the idea of the club cards. I would like to thank you for what you are doing.

Posted by: JPH | February 5, 2007 3:19 PM | Report abuse

I like this bill. Consumers have been losing the privacy battle against marketers for too long.

I figured we'd never see the government do anything about consumer information data mining until a politician had embarassing shopping records leaked during an election year. (November 2, 2008: "Safeway Club Card records obtained by the Washington Post show that Senator John Smith bought nothing but beer and pantyhose during a shopping trip on the night of October 17th.")

Posted by: Mike (but my Giant Bonuscard thinks I'm Matt) | February 5, 2007 3:21 PM | Report abuse

Sen Ali: I do not like these cards, therefore I shop elsewhere. Simple. I applaud your shining the light on this for those that do not get it, but please drop your nanny-state bill and let the market correct itself. Your law would just make people MORE comfortable with this practice. And the abuses will still occur.

Posted by: gitarre | February 5, 2007 6:31 PM | Report abuse

Sen Ali: I do not like these cards, therefore I shop elsewhere. Simple. I applaud your shining the light on this for those that do not get it, but please drop your nanny-state bill and let the market correct itself. Your law would just make people MORE comfortable with this practice. And the abuses will still occur.

Posted by: gitarre | February 5, 2007 6:34 PM | Report abuse

I'm scared by the fact that I gave Safeway the right information, but Safeway GOT, the wrong information!

Posted by: Count Bobulescu | February 6, 2007 12:26 AM | Report abuse

gitarre writes: "I do not like these cards, therefore I shop elsewhere. Simple."

Well, gitarre, you are quite fortunate. Many people don't have the option to NOT grocery shop at Giant or Safeway. I suppose they could "protect their privacy" by shopping at Whole Foods. If it's near them. And if they can afford it.

Del. Saqib Ali's legislation is reasonable and could give a consumer the ability to make informed market choices--see the bill's "right to inquiry."

Posted by: mizbinkley | February 6, 2007 10:09 AM | Report abuse

Delegate Ali,

No one is forced to get these cards. If people sign up for them, they should realize what they are getting into. To try and curtail the selling of this information will make these card programs less profitable for businesses and therefore reduce the discounts offered to customers. In the name of helping the consumer, you are actually hurting him.

You say you want to protect consumers' privacy, and yet anyone that concerned with privacy can simpy choose to stop using discount cards. Or, better yet, they can go to Wal-Mart, which does not have these cards.

This bill is just another example of paternalistic liberalism that thinks people are too stupid to make the "right" decision. Marylanders are smart enough to weigh the trade-offs that come with these cards. There is no need for this law.

Posted by: MK | February 6, 2007 12:03 PM | Report abuse

Del. Ali,

OK, you used to be a Software Engineer and you're worried about the impact on consumers-hats off.

I used to work in a car dealership and saw many things that wouldn't pass the "sniff test" and should be of greater concern to the consumer than the limited amount of purchasing trend data these cards collect.

Last time I check, it was still legal to purchase contraceptives, cigarettes and alcohol. Until it is not, there can be no arguement that this data can be used "against" the consumer.

The liberatarian in me (what little there is) says that the idea of prohibiting the TRANSFER of this data could be a good idea, BUT, the further provisions of this bill smacks all too much of the unfreindly business climate that the "one Party" is fostering.

Posted by: BG from PG | February 6, 2007 1:21 PM | Report abuse

we need more of a reason than that a new Delegate wants to be able to say he has gotten a bill passed and therefore has mastered the legislative process. the voters can self-police. Where are the examples of abuse in Montgomery County that could not have been prevented but for this legislation?

Posted by: too many laws on the books | February 6, 2007 2:42 PM | Report abuse

del.ali I find it amusing that you chose this superfluous subject to waste time on,it demonstrates how our elected representatives view their constitituents{as dumb downed persons that need the government to take charge of their daily lives in every fashion}.It is my opinion that the schools should be a priority,followed by safety at home and on the street,then environment,not giving convicted FELONS the right to vote.enough said GO TO ANNAPOLIS AND INTRODUCE MEANINGFUL LEGISLATION SUBMITTED BY BOTH POLITICAL PARTIES

Posted by: true libertarian | February 21, 2007 10:48 AM | Report abuse

del.ali I find it amusing that you chose this superfluous subject to waste time on,it demonstrates how our elected representatives view their constitituents{as dumb downed persons that need the government to take charge of their daily lives in every fashion}.It is my opinion that the schools should be a priority,followed by safety at home and on the street,then environment,not giving convicted FELONS the right to vote.enough said GO TO ANNAPOLIS AND INTRODUCE MEANINGFUL LEGISLATION SUBMITTED BY BOTH POLITICAL PARTIES

Posted by: true libertarian | February 21, 2007 10:49 AM | Report abuse

del.ali I find it amusing that you chose this superfluous subject to waste time on,it demonstrates how our elected representatives view their constitituents{as dumb downed persons that need the government to take charge of their daily lives in every fashion}.It is my opinion that the schools should be a priority,followed by safety at home and on the street,then environment,not giving convicted FELONS the right to vote.enough said GO TO ANNAPOLIS AND INTRODUCE MEANINGFUL LEGISLATION SUBMITTED BY BOTH POLITICAL PARTIES

Posted by: true libertarian | February 21, 2007 10:58 AM | Report abuse

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