Loyalty Card/Recall Notification Settlement Nearing: What Will this Mean for Retailers?
Updated: Nov 22, 2018
Retailers who issue loyalty cards may be soon finding out if they hold notification responsibility when loyalty card customers purchase items that are subsequently recalled.
It’s been nearly five years since the March 2011 filing of the suit against Safeway Inc. for non-notification of loyalty card holders about recalls on items purchased. The suit was filed by consumers, with partial representation by the Center for Science in the Public Interest, and a class action status request. The suit contends that by not using loyalty card data on customer purchases and contact information to inform those who purchased recalled products, Safeway was negligent. Safeway’s argument was that such non-mandated notifications are cost prohibitive and customers often do not provide complete, legible, or even accurate information. CSPI disputed that, noting that it is the contractual duty of suppliers to pay recall expenses, and other retailers do notify customers.
According to an FSN article, it’s beginning to look like a settlement could be near. On January 7, the article said, CSPI Attorney Maia Kats said new information regarding the settlement talks could be posted in the docket in a “couple of weeks.”
What will a judgement mean for Safeway and other retailers who issue loyalty cards? If the CSPI/consumer side wins out, it will be mandatory for retailers to use loyalty card data to notify customers who purchased a recalled food item. If Safeway prevails, such notification will remain optional. Of course, a negotiated settlement could fall anywhere between the two.
Given the possibility of mandatory notification, should retailers continue to issue the cards or would they be better off to forgo the benefits of the acquired marketing data and cancel the cards? And regardless of the outcome, should loyalty card-issuing retailers consider notification to be a responsibility?
As I said in a 2014 column on this topic, to which I continue to hold, I believe that with shopper cards, the pros outweigh the cons. To explain why, let’s look at the pros and cons from both the business and a food safety perspective:
Setting up a system that enables a retailer to quickly contact customers who purchase an item that is recalled would certainly take some effort and time – and would have some fallibility in assuring accuracy of the initial information provided by customers as well as ongoing updates of moves, email/phone changes, etc. But setting up such a system also enables the retailer to contact its customers to potentially prevent a food-poisoning incident or allergic reaction – increasing consumer safety and reducing, or even preventing, the economic repercussions of an incident.
Additionally, in the intervening years since the original filing of the case, more and more retailers are using their loyalty card data to contact customers by postal mail, email, and even phone through text for coupons and specials. It would not take a lot more to add recall notifications to this.
Perhaps a few check boxes could be added to the loyalty card form:
I do/do not wish receive store coupons.
I do/do not want to be notified of store specials.
I do/do not wish to be informed if any food I’ve purchased is subject to a recall.
I, personally, cannot imagine that anyone would check “do not” for the third bullet.
So, in addition to simply being a good Samaritan to your customers and looking out for the food safety of the products you sell, I believe that the business benefits of the data acquired by such programs and the food safety logic of knowing exactly who purchased a food item that could cause illness or death more than outweigh any downsides (as I said, too, in 2014).
I also said, “time will tell if consumers begin to choose to shop at stores that routinely alert their customers about recalls.” I think that time is already telling us that customers will spend their dollars with retailers who reward their loyalty (simply look at Amazon’s rate of purchase by its Prime customers, or the lines at the gas station where grocery purchases give back in dollars off gas). I would think that a store’s commitment to recall notification would follow this same theme, assuming overall value is retained.
One also has to look at the current environment of food safety with the media and consumer focus on food safety issues. This is coupled by the attention that foodborne illness has got from attorneys. Stores who do not pursue a best-in-class type approach do face potential questions if things go wrong and certainly, if you have a program and don’t take advantage of it from a public health perspective, there is already precedent with this case that the issue can bite back. As I, once again, said in 2014: “If the price is good and the quality is good then the notifications can only be seen as a bonus, and personally I hope that is the trend of the future” – no matter which side wins in this lawsuit.
About The Acheson Group (TAG)
Led by Former FDA Associate Commissioner for Foods Dr. David Acheson, TAG is a food safety consulting group that provides guidance and expertise worldwide for companies throughout the food supply chain. With in-depth industry knowledge combined with real-world experience, TAG's team of food safety experts help companies more effectively mitigate risk, improve operational efficiencies, and ensure regulatory and standards compliance. www.AchesonGroup.com