THE CLUB CARD DOUBLE-PRICING SCAM
An Essay by Zelda Gordon, No-Cards Shoppers
Once upon a time, in the days before the proliferation of
bar codes, most packaged merchandise was labeled with something
called a "price tag." It was affixed to the product or printed on
the packaging, and it told the price of the item in actual
dollars and cents. This made raising the price of items already
tagged and on the shelf rather labor intensive, as all the old
tags had to be removed or marked out. If a product was brought
to the register with two different prices, the merchant was
required by law to charge the lower of the two.
Today, merchandise is packaged with identifying bar codes
which are scanned into a computerized register which reads the
code and "rings up" the item at a price pre-programmed into the
system. The retailer is spared the labor of putting a price tag
on every item and replacing tags when prices change. A sign or
shelf label tells the customer how much any given product will
cost. The retailer is only required to insure that the posted
price and the price in the computer agree. (Should the consumer
not manage to remember or write down the posted prices on the
fifteen or twenty items she now takes, tagless, to the checkout,
and then be overcharged for one of them, that is her tough luck.)
After bar codes for the products came bar codes for the
customers. In our technological age, why not make it easy for
the stores to "reward" their "loyal" customers with "lower"
prices? Enter shopper club cards: Now selected items in your
supermarket are posted with two prices -- a higher one for
unregistered customers, and a lower one those who present the
bar-coded ID card. When your bar code meets the product bar
code, Voila! -- the computer charges you the lower price.
Exactly how is this double-pricing/ID scheme dishonest,
discriminatory and subject to abuse? Let me count the ways!
* The FTC instructs merchants that in order for an item to be
honestly advertised at a "sale" price, it must have been offered
at a former non-sale price for a period of time. This is
sometimes referred to as the "customary and average" price.
Stores get around this rule by using a different vocabulary --
words like "special," "value" or "savings." Nonetheless, they
are clearly touting the lower prices as representing discounts
from the higher "regular" prices. The reality of the pricing, as
every shopper knows, is that while there are some bargains to be
found, more often the "special" price is close to the price we
would expect to pay, while the regular price is exorbitant,
representing not a "sale" to the card holder but a penalty to
everyone else. As such, claims of "savings," from the cash
register receipt ("you saved $...") to the freeway billboard, are
blatant misrepresentations. (The truthful receipt should say,
"You avoided a penalty of $...") Put simply, two-tiered pricing
comes hand-in-hand with false advertising.
* Perhaps you do feel you "save" when you shop with a card.
Now, is that because the store beat another store's price or
because they beat their own price? Used to be, stores competed
with each other. They looked at prices charged by their
competition and sought to woo customers with better prices,
products and services. Now the competition is not between the
stores but between the customers. Now a single store can inflate
a price for one class of customer to make another class of
customer feel "special." Now the merchant next door can look
over his shoulder and see that Grocery A has one product marked
with two prices; and if Grocery B can beat that inflated
non-card-holder price, Grocery B can also claim that "you
saved." In this way all stores are drawn into the price
inflation and false advertising that comes with two-tiered
pricing, even those that don't have card programs. Further, as
small grocers are bought out by larger stores and as single
corporations operate multiple chains under different names, you
may find that Grocery A and Grocery B are one and the same. What
looks like price competition is really price coordination.
That's a monopolistic ploy, and we have anti-trust laws in this
country to prevent just such unfair business practices.
* Let's talk about "rewards" and "service." The stores claim
that their card programs offer "rewards" to frequent customers
and provide the tools they need to "serve you better." But who
is really being rewarded and who is being served? Unlike a flat
percentage discount (10% off) or a special offered with a volume
buy (free turkey with $100 purchase), two-tiered item-by-item
pricing provides retailers with a good deal more predictability
regarding sales and inventory. They know exactly which items you
buy. They know exactly what "specials" you fall for. They know
where to take a loss on a product to get people into the store,
and they know where to make up the difference in higher prices
elsewhere. How do they know? We tell them every time we shop
with a card! The two-tiered pricing system combined with the
massive amounts of data being collected allow stores to
manipulate our buying habits to insure their profits. Excuse me,
but who did you say was being served?!
* Another claim the stores make is that their card schemes
are "fair and nondiscriminatory" because "the cards are free and
available to all." Let's start with, "The cards are free."
The cards are not free. We pay for them with our personal
information and buying data. This data is a very valuable
commodity, as we have seen. Not only do the stores use it to
increase profits, but the marketing industry can and does sell
such information by the data field, measuring the worth of our
personal information in actual pennies per factoid. For the
consumers, the price of this information is nothing less than our
privacy and possibly even our liberty. How would you like to
have records of your liquor purchases used against you in traffic
court? Which brings me to a very basic, gut reaction I have
when I'm told that "the cards are free": Yeah, and the Nazis
gave away their armbands and tattoos for free too!
Now we come to the second half of this formula: "The pricing
is not discriminatory because the cards are available to all."
Another version of this goes, "You don't have to have a card, you
just won't get the discounts." It's hard to rebut logic like
that, but let me try. Yes, the card is "available" to all, but
not the lower tier of pricing. The "specials" are specifically
denied to those who refuse to "sign up." But refusing to sign up
is not the same thing as choosing to pay more! No one "chooses"
to pay more. I avoid the cards because, per the above
association, I have a deep loathing for such ID systems.
Likewise, there are those who object to being "numbered" on
religious grounds, and many who object for philosophical reasons
unrelated to any religious identity or creed. In this country,
how we think and what we believe is not just cause for unequal
treatment. Charging some people more for food because they will
not comply with a system that is morally or intellectually
abhorrent to us is absolutely discrimination.
Take a look into the future with me, if you feel I'm being
over-sensitive. Today I must pay $1 more than my neighbor does
for a gallon of milk because I refuse to have a store ID card.
Perhaps I'm willing to accept that as a "privacy tax," for now.
Meanwhile, other customers, unwilling to pay the tax, are
falsifying information so they can get card prices without
surrendering their personal information. In an effort to crack
down and make sure that each customer is who his card says he is,
the stores then require a fingerprint with the card. Since this
is more intrusive, more customers reject the scheme and the store
must raise the stakes -- now if you don't want to be
fingerprinted, you can pay $10 more for milk. What's to stop
them? "Everyone has a fingerprint," they say, "and the card is
free." (And don't forget the classic, "There's no law against
making a profit." Fingerprinting costs money, you know.) Pretty
soon, we might be paying $100 for a gallon of milk -- unless we
give up our DNA at a bio-bar-code station at the check-out
counter. Think it can't happen? A precedent for just such a
scenario is being set right now at your local grocery store.
* Finally, let me address the "fairness" factor from a
different perspective. Suppose, for the sake of argument, that
we agree that the loyalty card system is nondiscriminatory in
theory. It must also be nondiscriminatory in practice. In fact
it is not. Here in Albuquerque we have seen that when pressure
is applied by consumers, and a little negative publicity starts
appearing in the media, stores soften on their card program
implementation. A troublesome customer can get the lower prices
without the card. The cashier or manager can override the system
with a "cashier's card" -- this has been done for me. In this
instance, who is being treated unfairly? All of those
card-carrying customers who have surrendered information in
exchange for a "discount" which I received "for free." (Not
really free, though, if you count the stress factor of having
these confrontations.) The point is, the more "the rules" are
allowed to flex, the more arbitrary and unfair the system
becomes. When a cashier can determine, off the cuff, who will be
charged which prices, you have a system subject to all kinds of
abuse. The greater the discrepancy between those two tiers of
pricing, the greater the pressure on the customer to either
comply with the rules or circumvent them; and the greater the
pressure on the merchant to enforce the system, perhaps by
imposing even more "conditions" on the "sale."
In summary, we cannot expect to see an end to these
privacy-invading "club card" schemes unless the stores are denied
the prime incentive used to get people to "sign up" -- two-tiered
pricing. There is a simple way to combat such systems -- reject
them! When you are in a shopper card store, insist on receiving
the lower prices without showing an ID card. State clearly that
you do not accept the validity or the legality of the system.
Walk away and leave your items on the conveyor belt if you do not
get satisfaction. When employees are slowed down by having to
return goods to the shelves, void sales, and quarrel with
customers, and as lines lengthen at the check-out counters,
management will realize that two-tiered pricing just isn't as
profitable as it looks. Demand that your grocer earn your
"loyalty" the old fashioned way -- with fair pricing, honest
advertising and real customer service.
---Zelda Gordon, 10/99