An Advanced, Privacy-Friendly Loyalty System
Loyalty systems are a very popular service employed by retailers in order to measure and reward customer loyalty. However, currently deployed systems introduce many privacy risks, as the users’ data is completely controlled by retailers. In this work we t
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Abstract. Loyalty systems are a very popular service employed by retailers in order to measure and reward customer loyalty. However, currently deployed systems introduce many privacy risks, as the users’ data is completely controlled by retailers. In this work we tackle this issue by investigating the requirements posed on a privacy-friendly loyalty system and proposing a new design for a digital loyalty system. With this novel approach, the users are given more control over their data, but retailers are still able to measure their loyalty and perform (authorised) data collection. Additionally, the functionality of the design is flexible and allows for deployment of more advanced services. Keywords: loyalty system, privacy, user profiles, anonymous credentials.
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Introduction
The retailing business has changed significantly over the last decades. The competitive environment has led to the development of new services that incentivise customer loyalty. Examples are the loyalty points system or personalised advertisement and offers. Although these approaches may increase user satisfaction, they also bring significant privacy concerns. In order to make personalised offers to the customers, or to reward their loyalty, the service providers simply record all their purchases. This data is then used to determine preferences or to measure customers’ loyalty. With this approach, users disclose information that is not required for delivering these services. Only a part of the revealed data would suffice to have fully featured services. When taking part in the aforementioned schemes, the customers are usually not aware of the magnitude of information that is collected or even how it will be handled. Data mining techniques are increasingly powerful and collected data can reveal much more than even privacy-wary users would suspect. Most importantly, these services do not require users’ identities, but some providers nonetheless collect it. This provides a direct link between the behaviour and the identity of the customer. An additional concern is also the protection of the databases that store this data. Even with major providers, they can suffer from deliberate or accidental leakages [5]. Even though these services are becoming increasingly ubiquitous and privacy concerns are not negligible, little attention is given to developing solutions that M. Hansen et al. (Eds.): Privacy and Identity 2014, IFIP AICT 421, pp. 128–138, 2014. c IFIP International Federation for Information Processing 2014
An Advanced, Privacy-Friendly Loyalty System
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would protect the privacy of the users. Some providers shy away from employing these services, in order to avoid customers’ negative reactions [16]. A recent survey indicates that almost 30% of customers believe that too much information is collected through the loyalty services, leading 24% of users to decline taking part in them [9]. This shows that a change in current practices is necessary. Next to the aforementioned issues, an additional drawback of the existing systems is the practical
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