Jan 23, 2026
Loyalty programs were once designed to thank customers for sticking around. This could include perks like free coffee, airline miles, or grocery discounts in exchange for repeat business. But that long-standing model of mutual benefit is rapidly disappearing.
According to The Washington Post (1), these programs increasingly rely on a disturbing pattern called “surveillance pricing” where they collect data to create “individualized prices” — a tactic that may punish rather than reward consumer loyalty.
When loyalty stops paying off
The Post’s technology columnist, Geoffrey A. Fowler, reports that the more frequently he visited Starbucks, the fewer promotions he received through its app.
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After requesting his data under California’s privacy law, Fowler discovered that the company had tracked every purchase, offer and even 93 clicks in a single day. Two former Federal Trade Commission (FTC) officials who reviewed the data called it evidence of surveillance pricing.
According to the FTC’s Surveillance Pricing Market Study (2), details like a person’s location or browser history can be used to offer consumers different prices for the same products and services.
“Are Starbucks’ most loyal customers actually getting the fewest coupons?” asked Samuel Levine, the FTC’s former director of the Bureau of Consumer Protection. “That’s certainly what this report suggests.”
Starbucks told The Post it doesn’t set individual prices based on behaviour, but confirmed it uses “inferences” — judgments based on a customer’s purchase history — to decide who gets discounts.
Fowler reports that the company’s AI tool, Deep Brew, analyzes data to “identify and incentivize specific Rewards members cohorts,” according to its 2024 earnings call.
Frequent customers may get fewer deals because the system assumes they’ll pay full price anyway. That means two people could walk into the same Starbucks and pay different prices for the same latte because of data-driven assumptions about what price they’ll put up with.
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The rise of surveillance pricing
In The Post article, Levine and Stephanie Nguyen, former chief technologist at the FTC, warn that loyalty programs have evolved into “backdoor laboratories for pricing.” Using vast datasets, companies can infer a shopper’s income, price sensitivity, and even intelligence — and use that information to tailor discounts.
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“This is a lot more than tracking whether you like egg McMuffins in the morning,” Levine said.
Starbucks isn’t alone.
A Consumer Reports investigation found that the Kroger grocery chain uses detailed customer data, including estimated income, to personalize loyalty discounts. Lower-income customers could end up with smaller or less frequent deals.
Airlines and hotels have long employed similar tactics, quietly devaluing points or making rewards harder to redeem.
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“Loyalty programs sound like a win-win deal,” said Levine. “But they’re really just wins for companies.”
Can consumers push back?
Quitting loyalty programs entirely isn’t realistic for most people. In an inflationary economy, the promise of even small discounts can make them feel like a necessity. Yet experts say consumers can take small steps to regain control:
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Be aware of retail practices. Actively compare notes with friends or family to spot differences in pricing. Beware that how you click, scroll, or search online can reveal your spending habits and influence the prices or offers you see.
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Review data privacy settings. A handful of state privacy laws now allow consumers to request access to their data or opt out of certain types of data sharing.
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Track your savings. Compare the value of your rewards and discounts to your actual spending. If your spending significantly outpaces your rewards, it’s not loyalty — it’s loss.
According to Fowler's reporting, Nguyen says the bigger fix must come from regulators. Existing privacy laws already require companies to minimize data collection, but enforcement has lagged.
“We shouldn’t be put in a position where we have to decide between affording our groceries and protecting our privacy,” Levine said.
As companies leverage data to predict and exploit spending behavior, consumers are realizing that the actual cost of “free rewards” might be higher than they thought.
Scanning a rewards card no longer just buys you coffee. It buys the company a clearer picture of who you are and how much more you’re willing to pay.
Article sources
We rely only on vetted sources and credible third-party reporting. For details, see our editorial ethics and guidelines.
The Washington Post (1); Federal Trade Commission (2); Consumer Reports (3)
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Monique Danao is a highly experienced journalist, editor and copywriter with 8 years of expertise in finance and technology. Her work has been featured in leading publications such as Forbes, Decential, 99Designs, Fast Capital 360, Social Media Today and the South China Morning Post.
