Can a company exclude Californians from a loyalty program?


Some retailers have expressed confusion about whether a loyalty program might be considered a “financial incentive” program under the CCPA. If a loyalty program were classified as a “financial incentive program,” it might, among other things, require the business to confirm that differences in “price, rate, level, or quality of goods or services” offered to consumers are “directly related to the value provided to the business by the consumer’s data.”1

Most loyalty programs have a strong argument that they are not financial incentive programs as the main purpose of the program is to provide benefits in recognition of (or in exchange for) repeat purchasing patterns, and not “for the collection of personal information.”  Nonetheless, some retailers have expressed concern that privacy advocates, or plaintiffs attorneys, might attempt to argue that all loyalty programs amount to financial incentives.  In order to avoid the cost of defending such an argument, they have considered excluding Californians from the scope of their loyalty programs.

While the CCPA prohibits discriminating against a consumer that exercises one of their rights under the Act,2 the CCPA does not confer a right to join loyalty programs.  As a result, a company can elect to exclude Californians completely from loyalty programs in order to avoid the risk that the program might be alleged to be a financial incentive program.