Document Type
Paper
Publication Date
10-2025
Abstract
This paper examines the devolution of loyalty programs — from simple coupon programs to major lines of business transforming the retail experience. This devolution is happening in three stages. In the first stage — the hook — companies entice consumers by promising generous upfront benefits if consumers enroll. In the second stage — the hack — companies use loyalty programs to extract deep insights into our spending habits and willingness to pay, effectively hacking our brains. And in the third stage — the hike — companies make these programs worse for consumers — raising fees, devaluing points, limiting redemption options, and curtailing benefits. The result of these three stages is a wholesale transfer of wealth from consumers to corporations, with companies collecting ever-more data while offering ever-diminishing savings. This paper examines the state consumer protection and privacy tools available to regulators to deter deceptive claims, ensure rewards are transparent, and challenge secret price hikes, with the final section of this paper detailing how states can ensure these programs are truly rewarding for consumers. By tracing how rewards programs are changing, this paper gains a window into the future of pricing itself — and the risks that the model of loyalty programs poses for affordability and fairness.
Disciplines
Consumer Protection Law | Law | Privacy Law
Recommended Citation
Samuel A. Levine & Stephanie T. Nguyen,
The Loyalty Trap: How Loyalty Programs Hook Us with Deals, Hack our Brains, and Hike Our Prices,
(2025).
Available at:
https://scholarship.law.columbia.edu/law_economy/8
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