How Cashrewards and ShopBack cashback sites use your data

must know

  • Cashback sites collect your data when you register
  • Your data is used to create targeted or personalized advertisements
  • Cashback sites share your data with third parties

Cashback sites offer people cash rewards simply for using their link to navigate to a retailer’s website when making an online purchase.

Cashback sites – Cashrewards, ShopBack and Kickback are the most popular in Australia – partner with selected retailers, each offering either a percentage or a fixed discount on purchases.

Sounds like an easy way to save some money, so what’s the harm? As always, it is important to start by asking “what can this do for them? “.

How cashback sites work

You must first register as a member, which involves providing personal information such as your name, email address and phone number.

Then you can browse the cashback site of the retailers you want to shop with, and click to be redirected to their site (you will notice that a special URL is generated which allows your purchases from the retailer’s site to be linked to your cashback Account).

You then make your purchase on the retailer’s site as you normally would.

You must first register as a member, which involves providing personal information such as your name, email address and phone number.

Once the purchase is made, the merchant pays a commission to the cashback site, which passes on the advertised cashback amount to you. This amount then appears as a credit in your account on the cashback site.

For example, if you buy a $100 pair of sunglasses from a site that promises 4% cashback, you will receive a $4 credit to your account.

Finally, you can withdraw your credits in cash from your cashback account, to pay them to your designated bank or PayPal account. Note that most cashback sites have a minimum withdrawal amount of around $10, so you may need to make several purchases before you can redeem your credit for cash.

Popular with Australians

Cashback sites are rapidly growing in popularity, with millions of Australians now subscribing to these services.

Market leader ShopBack has 1.5 million Australian members, of which 458,822 are considered active members, meaning they have used the site to make a purchase in the last 12 months.

Cashrewards has 1.1 million Australian members, including 273,000 active members.

How much can you save?

While some cashback sites may advertise cashback rates as high as 40%, most offers range from 1% to 10% cashback, with the most common amounts being between 3 and 6%.

Sometimes significantly higher cashback percentages are offered, but with a cap on the maximum amount you can claim.

Some retailers offer discounts on a fixed amount, such as $35 off, but these are usually for sign-up services that have a high total cost, such as internet packages.

How cashback sites make money

The basic business model of cashback sites is quite simple. They earn a commission from the retailer each time they refer a customer to their site who completes a transaction.

They pass some of that commission on to the buyer in the form of cash back and then pocket the rest for themselves, meaning they earn money every time a purchase is made in using the retailer’s link on their site.

Sharing valuable consumer behavior data also seems to be an unspoken part of the market.

This commission arrangement seems like a win-win for the consumer and the cashback site, but what do retailers get out of it?

At first glance, customers. The idea is that just as retailers spend money on advertising to drive customers to their sites, retailers pay a commission to the cashback site to send shoppers on their way. According to cashback sites, their offer is just another marketing channel for retailers.

Thus, the financial arrangement between the cashback site, the consumer and the retailer seems straightforward at first glance. But according to CHOICE consumer data advocate Kate Bower, sharing valuable consumer behavior data also seems to be an unspoken part of the market.

Why should you be wary of cashback sites?

Cashback sites seem to offer a lot to consumers – just provide some personal information, click on their website and shop as you normally would and you’ll receive cash back in your pocket.

But as Bower explains, many consumers may not fully understand the relationship they are entering into when they register with one of these sites.

What information do they get about you?

“When you use a cashback site, you agree to transmit a lot of data about yourself,” warns Bower.

“People tend to focus on the personal information they provide during the registration process, such as their name, email address and date of birth, but what’s much more valuable is your data. consumer data, which is collected by tracking your online shopping behavior,” she said. Explain.

And it’s not just your online transactions that make up that data. Most cashback sites capture a lot more information than consumers realize.

Cashrewards may … capture sensitive information such as your health information, information about sexual orientation or practices, ethnic origin or religious beliefs

For example, ShopBack captures your location data, even when you are not actively using the app or website, as well as data from third parties, including social media providers and Google.

Kickback captures social media profile information and location data.

And Cashrewards may use your transaction behavior to capture sensitive information such as your health information, information about sexual orientation or practices, ethnic origin or religious beliefs.

What are your data used for?

While the three cashback sites we reviewed for this article explicitly state that they don’t sell user data, Bower says that doesn’t mean they don’t use it to make money.

“Consumer behavior data is extremely valuable to businesses. It can be used to manipulate and influence consumers through direct marketing, behavioral advertising, and even personalized pricing.”

“That means companies can use your data to convince you to buy things you don’t need or even charge you higher prices for certain items,” she says.

You basically agree to give these companies information on how to get you to spend more money

Kate Bower, CHOICE Consumer Data Advocate

The cashback sites’ privacy policies state that they use your data to do things like “serve relevant advertisements”, “to personalize the website experience and/or the advertising hosted on our website” and to ” analyze, maintain and improve our service and its promotion”.

While these uses all sound vaguely positive, Bower says what they really mean is that they use your consumption data to make more money from you.

“When you hand over your consumer behavior data, you’re essentially agreeing to give these companies information on how to get you to spend more money,” she says.

Who do they share your data with?

Perhaps the most disturbing fact about these sites is that they don’t just capture your data for their own use. Their privacy policies contain a long list of third parties with whom they share your personal data, including retailers with whom they partner to provide their service.

This means that when you shop on a cashback site, you consent to your data potentially being shared with thousands of retailers, who can then use this information to create advertisements targeted to you or others who match your profile. of consumer.

Their privacy policies contain a long list of third parties with whom they share your personal data

“When you consider the value of this consumer data to retailers partnering with the cashback site, the financial arrangement between them starts to make more sense,” Bower says.

“Yes, they pay a commission to the cashback site in exchange for referring a shopper, but they also receive whatever consumer behavior data the cashback site has on that shopper.”

Should I use cashback sites?

While many consumers may be surprised to learn how much of their consumer data is captured and shared when they use these sites, Bower says whether or not to use them always comes down to personal choice.

“With the cost of living currently so high, I can see why consumers are drawn to these sites,” she says.

“Consumers just need to be aware of what they’re actually handing over when they sign up to these sites, before deciding whether or not this is a deal they’re willing to make.”

Consumers just need to be aware of what they are handing over when they register on these sites.

CHOICE consumer data advocate Kate Bower

Bower believes that tighter regulation of the use of consumer data is essential to maintaining online market fairness for consumers.

“There is currently an imbalance between what consumers know about companies and what these companies know about their consumers,” she explains.

“We need to regulate how companies are allowed to collect and use consumer data, to put the power back into consumers.”