You know the drill: You head to the checkout with your shopping basket and give the salesperson your loyalty and rewards card. They scan it, you pay, and you’re that much closer to your reward.

Understand, however, that these types of programs are often two-way streets, and there’s a price for the extra benefits you can get: While you’re racking up bonus miles and points, retailers are keeping track in their own way by recording your purchasing information — and are privy to data that can tell them when and where you’ve shopped, how much you’ve spent, and even the items you’ve bought.

“They (businesses) can take a look at your transactions and see that you may have a lot of money for discretionary spending and then market to you accordingly,” says Michael Janigan, executive director and general counsel with the Public Interest Advocacy Centre in Ottawa. “Or they might look and see that you pay by Visa for amounts as low as $7 — you may be accessible to advertisements for payday loans. There’s a whole wealth of information that can be mined in that circumstance. What is marketed to the customer as an incentive to shop at a store is actually something quite different.”

You can get a fair idea of what businesses are looking at by the kind of junk mail you get, but would it be possible for a marketer, if they were interested in finding out, to electronically rifle through your shopping basket to find out what kind of condoms you’re buying? In some programs, yes. While federal privacy laws under PIPEDA (Personal Information Protection and Electronic Documents Act) dictate businesses require your consent to collect or even disclose such information, contracts with these types of programs are entirely one-sided, says Janigan.

But big business retailers and service companies are often too busy to care about the fine details of your spending habits, says David Fraser, a privacy lawyer with Halifax-based firm McInnes Cooper — noting in-house loyalty programs (a store that sets up and runs its own, for example) are more likely to mine specific information for inventory purposes than those offered across several stores.

A 2002 investigation by the federal Privacy Commissioner found that Air Miles — Canada’s largest rewards program at 9.8 million members and counting — collects only basic data from the transaction: The date, store address and name, dollar value, number of miles earned and occasionally the category of purchase and the type of Air Miles card carried.

With the wide popularity of loyalty programs (more than eight million people have Shoppers Drug Mart’s Optimum card, for instance), Fraser adds businesses have too much to lose by scrutinizing your personal spending habits. The last thing they want is for you to opt out of their initiative.

“Not everybody is concerned about privacy, but in Canada enough are that it just doesn’t make business sense to alienate those people,” says Fraser. “They (merchants) get some value from disclosing that information to marketing companies, but the value that they get is not overridden by the damage to the relationship with the customer if they did it without their OK.”

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