Why The New flybuys Is A Rip-Off

Coles has revamped its flybuys loyalty scheme, changing the way you can earn points and redeem them. But the most important feature of the scheme remains the same: you will have to spend a massive amount of money to reap any long-term benefits, and you'll be sacrificing a lot of personal information to do so. We'll tell you how to make the most of flybuys if you do sign up, but you really need to examine whether it's worth it.

With a massive advertising campaign featuring Dawn French, it's unlikely you haven't heard about the flybuys revamp. And if you're an existing flybuys customer, you'll already have been sent a replacement card and asked to re-register it. (The annoying lower case 'f' is now Coles' preferred style, by the way.)

Like its most obvious rival, Woolworths Everyday Rewards, Coles lets you earn points which can then be redeemed for a variety of items. But you have to spend a lot of money to earn a very small number of points. Here's how the system works, and why you're unlikely to get much out of it.

Earning points: a slow process

You earn one point for each dollar you spend at Coles, Target, Kmart and Liquorland. You can also earn one point per dollar of an AGL Energy Bill, and (as we've mentioned before) score points for recharging Telstra prepaid mobile services. All of those are, of course, dependent on you using those services: if you shop at Woolworths, have electricity with another provider and use Optus, there's not much going on. And there are other catches: for instance, tobacco doesn't count.

Other major participants include Coles Express fuel stores (you earn 1 point for every $2 you spend on travel booked through the service) and Webjet (which has the same $2/1 point ratio). Given that you'll pay a $20 fee simply for booking flights through Webjet, it's hard to see that ever adding up to a meaningful benefit.

The fastest way to accelerate your points earning is to sign up for a Coles-branded MasterCard. That gives you 2 points for each dollar you spend whenever you use the card, plus all the normal points you would earn. If you're disciplined about paying off your credit card, this will definitely accelerate your points earning — but it will still take a long time to accrue a worthwhile reward.

Spending points: a small reward

One way you can use those points is for a discount voucher for your supermarket shopping (a scheme called Flybuys dollars). 2000 points equals $10 off your Coles group shop (and you have to redeem in $10 lots). In other words, when you have spent $2000 at Coles, you will get $10 as a discount. That's a whopping 0.5% off. I don't imagine you'd go rushing to a store offering that small a discount in a catalogue, so why would you think that was a good bargain?

Here's a simple way to look at it. The flybuys brochure notes that if you spend (in participating stores) $150 a week on groceries, $60 a week on fuel, $50 a month on alcohol, $150 a month in Target and Kmart, $300 a quarter on power and $30 a month on phone recharges, take out an insurance policy with Coles and pay for it all with a Coles Mastercard, you will earn 52,100 points. "That would give you $260 off your Coles grocery bill in a year!" the brochure proclaims. What it doesn't tell you is that you will have spent $14,880 to get there. Your $260 represents a 1.7 per cent saving.

You can also use the points to purchase other items, but this is (again) often expensive. To pick from the most obviously Lifehacker-centric category, iPods: you can score a 2GB iPod shuffle for $36 plus 7800 points (which could represent up to $7800 in spending). A brand-new 2Gb Shuffle direct from Apple is only $55, so you're spending $7800 to save $20. That's a lousy value proposition.

Making the most of my5

One of the more heavily-hyped features of the flybuys revamp is my5: a list of five items which you will get a 10 per cent discount on every time you shop. That sounds appealing — it's a direct saving, not something you have to wait for — but the promotion is rife with sneaky conditions:

  • First and foremost, the offer only runs until October 31 this year. Coles might choose to extend it at that point, but it seems more likely it's being used as an enticement to get people to sign up.
  • You have to spend $50 to qualify for the discount. That's likely if you are doing a full family shop for the week, but it might not happen if you just dash in for a top-up. (What Coles is hoping is that you'll buy additional items to crack the $50 limit, but that's a ridiculous strategy for saving money.)
  • Only five items a day within each my5 "group" qualify for the discount. If you purchase more than five of one of your selections, nothing else in that group will qualify (though the discount will be applied to the highest-priced items in that case). With items sold by weight, you can't get more than 5 kilograms.
  • Not everything in the store qualifies. Depending on the category, you might find only Coles-branded products on offer, or you might find everything but Coles-branded items in there.

To make the most of my5, you ideally need to choose items that are relatively expensive and which you buy regularly. Given the time limit, you might also want to concentrate on dry goods which don't have an expiry date; that way, you can stock up on items while they're cheaper. The most obvious items I can think of in this space are nappies and dog food.

You should also be wary of Coles' automatic "suggestions" for your most frequently-purchased items, since those won't necessarily reap the biggest savings. A friend of mine signed up and used those suggestions. On her first shop of $238.30, the saving was just $1.52.

But I'm spending money anyway!

This is the most common argument amongst enthusiasts for flybuys (or any similar loyalty scheme): "I'm already buying this stuff anyway, so I might as well get the points." That's arguably true if you genuinely don't change your habits and continue to seek the best bargains. What Coles is relying on is that you'll feel tempted to keep earning points and change your spending habits more permanently.

But in return for your discount, as we've also noted before, you're giving away a lot of personal data. Coles will know a lot about your buying habits, and it will use that data to aggressively bombard you with offers. It can also sell that data to anyone else it wishes. Is that really worth a 0.5% saving? I'll stick to hunting down the cheapest food wherever it is, thanks.

Lifehacker's weekly Loaded column looks at better ways to manage (and stop worrying about) your money.


Comments

    This is all good information and useful!

    My question is that I'm flying to the US later this year and doing three or four internal flights there as well. Is it worthwhile to sign up and try and earn some points with flying?

    Or again is it not worth it?

      Pobably would get better rewards point-wise with a Coles Mastercard by Commonwealth. I'm considering getting one, but I don't quite spend enough in total for it to be worth it yet.

        If you go for the CBA Gold Mastercard you can also opt to get the American Express card on the same account in addition to the master card at no additional costs which earns more points than the Mastercard , while being accepted at less places.

        Anyway, I agree, you'll earn points quicker with an awards credit card and depending on what card you get you may also have various insurance benefits included, some of which *may* be beneficial to a traveller. Still, credit cards and shopping cards arent mutually exclusive, so if the privacy isn't an issue get both.

      Hey all of you folk! Do you ever consider the big picture? By getting sucked in to spending at Coles you are supporting a monopoly which is a) treating suppliers abysmally and b) encouraging you to squeeze out local traders, thereby diminishing all the positives of community.

        Susan Mahar is right! Not only do they have your spending habits on file they are monopolising the food & grocery market. so the prices are cheaper now..however wait til they have the whole monopoly. Prices then will be at their discretion and I do not think in our favour either.

    From the tone of your article you would think that the Australian population has been compelled by government legislation to join flybuys and forced to pay a $100 annual fee. 1. It's free 2. You don't have to join.

    My5? What's the downside? "Giving away a lot of personal data" - is this something new? Any evidence for the statement "it will use that data to aggressively bombard you with offers"? Has that happened in the past? Where exactly is the "rip-off"?

      The sign-up includes requests for additional demographic data to give you better offers.

        I saw all of that extra demographic information when I re-confirmed my details (existing Flybuys member) and just looked for the skip button. There was no way I was going to give them all of the rubbish they were asking for.

          enter random shit for the demographic questions. i have never been truthful in any demographic info requested unless i feel that some info may help a recovery of the account

        Fill in the form and don't give any personal information at all, which is what I did and they still sent the card.

      It's a rip-off because the cost of the program is factored into the cost of our groceries. The SMH reports that this current re-launch alone has cost Coles tens of millions of dollars. Guess who is paying for that? They are not taking the money out of their own pockets, that's for sure. You are correct when you say we are not forced to join. However, you are absolutely incorrect when you say it is free! We are all paying by way of higher grocery prices, whether you join or not.
      The scheme I like best is where I don't need to join anything, don't need to carry cards in my already bloated wallet, don't need to remember to present said card at the checkout, don't need to share private data, don't need to think about which liquor store is part of which chain, and most importantly.... don't need to wait for 2 years or more to receive a piffling $20 discount voucher off my groceries.
      As it happens, my local independent supermarket has a scheme exactly like that, and they are open 24 hours/7 days! On most things, their prices match Coles, or less, except for fruit and veg, which is considerably cheaper!

        Oh course. Coles/Woolworths subsidises all it's cheap milk, bread, and other promotions like this by absorbing the cost elsewhere. Most notoriously, and far reaching, in terms of the rise in fuel prices. It's no different to the way target, kmart, and big w sell books and other items BELOW COST and LOSE MONEY in the hopes of luring customers and making up the money in sales elsewhere in the store. In the long run, it's detrimental to everyone, but all they care about is regaining their marketshare and the ever growing value of their shares - Westfarmers (Colesgroup) is especially bad.

          The Fact Remains NOTHING IS FREE and there are NO Such things as rewards when shopping at any major retailer.

          Eventually WE WILL ALL PAY DEARLY. When they have reaped their prices so low that not even medium sized chain stores have been all but wiped out their prices will reap US and SKYROCKET.

          BUT! YOU! Are ALL! Too greedy to see that.

          Don t Shop at Cole's Or Woolworth's and honestly watch how low their prices really tumble.
          Australia should have a NO SHOPPING AT Coles stores week/ then month/then STUFF THEM

          I can Guarantee they would shit themselves if we done this.
          Put out the word.
          I say fellows and ladies LETS DO IT.
          Roger and Brian work for Coles and Wesfarmers Respectively thats why they are against US. True.

            and where would you shop if you don't shop is Coles or Woolies? You will end up spending a fortune on your groceries in IGA or Franklins??
            Put it simple, if you shop in coles and woolies why not have the both rewards cards? So even tho you shop and you will spend the money anyway you get points, (I am not sure about woolies) but Flybuys points don't expire any more. And the points can build up, so for every 2000 points you get $10 off your grocery bill. What is so bad here I don't get it?

      Well I got ripped off yesterday. I spent over $50 and had my printout with me, so I knew what things I had chosen (here's another one of their tricks - they're limiting the selection of things you can put on the my5 list to try and orient your purchases towards higher-profit items). At the top of the printout it says "Whenever you buy any of these products and spend over $50 in store, you'll get 10% off each one - even if it's already discounted or on special!" There is no mention of the five-item limit. Clearly it is a misrepresentation to state "you'll get 10% off each one." As there is no asterisk indicating the usual "terms and conditions apply" and one doesn't get offered the opportunity to print out all the terms and conditions, when I bought 10 of my relatively expensive item that will last a while I was surprised when I only got the discount for five of them. I've filled in their complaint form and will be raising a misrepresentation claim with Fair Trading.

        No proper response from Coles so I've just filed a claim with Fair Trading. Here's hoping they'll crush Coles in court with a gross misrepresentation finding. In the meantime I'm avoiding Coles.

      Hurray for some logic !
      As a long term Flybuys user who controls his spending and has linked to NAB card for extra points it has been great - nobody has compelled me to do anything except I can select to pick up some various items/ products and enjoy them, for no extra cost .
      A lot of time spent on the article, I suppose good to have a down side at least explained but how about the same amount of time on the upsides ?
      I have never been " bombarded" with anything .
      Good on you Brian and others that see the positive

      Spending $14880 for a measly 1.7% saving ?? - Come on Coles who are you trying to fool ???

    I got my FlyBuys card years ago and as Coles is my local supermarket and the cheapest anyway it really never been arduous to swipe the card at checkout time. I don't buy more, I don't buy different and every 6 months get a little extra money to spend there in return.

    In all those years I have received just one email related to products, so it's not exactly bombarding as you claim. As for them knowing that I tend to buy a lot of Chorizos, olive oil, salads and milk and very few canned foods, no baby products and no petfood, meh, who cares? What I eat isn't a state secret.

    Now if i could just convince them to stock chipotles.

    Interesting article. One thing that's not clear to me is how is the new Flybuys more of a ripoff compared to the old. Or perhaps I have just misinterpreted the title.

      It looks better value to me. The implied discount appears to me 56% better than before to get the same reward. It may have been not great value before, but it's substantially better now. I've also got the Woollies card but you don't get any points for the first $30 there. Hard to know how to pick your my5 to get the best value but 10% is better than nothing. Although Angus seems to think it's all bad...

    I used to be a Flybuys member, then I did the numbers on how much I'd actually have to spend to get anything at all, along side the fact that the points expired (not sure if they still do or not) meant that I would never be able to get anything. The card was thrown out at that point.

    I figured the new one would be pretty much the same, and this article basically confirms it's not worth having a thicker wallet over.

      They don't expire any more.

    Good article.
    I'm in the category, I'm spending it anyway and in no way do flybuys change my spending habbits. But I have redeemed a few gift cards from coles and woolworths over the past few years, so my gain form what i can tell.

    I had one appear in my letterbox last week and was a little concerned - for one they mispelled my name, and then I'm not sure how they got my details. I've never been a Flybuys user! I guess they raided the MyerOne database?

      No they would of raided the Electoral Roll, so have a quick check of your name next election and make sure it's correct.. or do what I do and have different 'seeded' spellings for my name (or other alias's) that I enter into these sort of Database marketing schemes so that you know where the data is sort of coming from so know whom to complain to when your data is sold to India or other countries that do not honour our privacy or Direct Marketing laws.

      FlyBuys was originally designed as a Direct marketing demographic sponge to collect buying habits and other data that could be applied to integrated marketing campaigns, nothing much has changed other than the major players whom now own it.

      My opinion on them? DO NOT USE THEM OR BECOME MEMBERS OF THEM or if you do, lie on the application. It's not unlawful.

      I think they must have raided the MyerOne database. My "new", unsolicited FlyBuys card was sent to my parents' address, not my own residential address. Since I'm registered to vote at my own address (in an entirely different state), I can only guess that the details came from some kind of marketing database.

    as someone who has been with flybuys for about 4 years, I haven't found anything adverse happen to my privacy because of flybuys. I don't get extra spam/junk from random companies, just from flybuys which is manageable. It hasn't changed my spending habits at all and over the 4 years I've cashed in my points to get $150 in gift cards plus receiving a free gillette razor. I have since given up on flybuys though, even though I still use the card when I can.

    Qantas Frequent Flyer program has worked out so much more better for me, points can be accumulated in a hugely greater number of ways compared to flybuys, and they can be spent on even more things. There are also vastly more QFF promotions which have let me accumulate 30k points in 5 months (approx $150-$200 of gift cards), while only spending a few thousand dollars during my normal spend, nothing extra/changed

      I think they just dip into the phone book. If you're publicly listed, they just pop cards in the post.

    I have been a member of Flybuys since 2003 and have redeemed some small appliances over the years. I shop at Coles sometimes and use the card if I'm there or at K-Mart or Target. Today when I went into my flybuys account after receiving my new card I have found that my point balance has been 'adjusted' to put it in line with the new rewards programme. What???? According to my Coles Myer Master Card, they transferred over 3000 points to my flybuys just before the new card came out. They have been adjusted down to 99 points........I noticed it's still 13,000 points to even get a pepper grinder. I think it was a great system when it started but this is amazing! I have written to them but their website states that there is a 'huge' response to the new card and they may not get back to me within 48 hours. Not impressed

    Looks like a direct copy of the flybe branding to me. Maybe Dawn French flew in with them? http://www.flybe.com/

    Woolworths Rewards peers with Qantas FF. A flight MEL-SYD is approx 8000 QFF points (worth about A$129 if the flight was bought online) .

    If you spend your A$ during Woolworths double points weeks to get points you would only need to spend A$4000 to get 8000 QFF Points which gets you a $129 flight. Or up to $8000 if your shopping outside of promotional times.

    Otherwise, as Angus says above, you could just shop where you choose, get the cheapest food you can, and buy a Jetstar flight for $39 - and you'd probably be a lot better off.

    Shoppers should have a BSOD policy (Best shop of day) just like business has (BFOD) Best (Air) Fare of Day. It's going to save you big $$ in the long run.

    BIG Problem is that all your existing points just got DEVALUED.
    Sure the rewards are now 1 point for $1, but the rewards are far less.

    $20 voucher used to cost 2500 points, now a $10 voucher costs 2000 points.
    If you had 20000 points sitting there already, they just went from being worth $160 down to $100.

    It's what they are not advertising which you should be looking at.

      old info from flybuys web itself $10 used to be 1250 points.

      https://www.flybuys.com.au/export/sites/default/flybuys/content/information/mediacentre/FlyBuysFastFacts.pdf

      You are wrong, Simo. Everyone's points were REVALUED so that they were worth the same.

      Actually, they adjusted your points balance so you still have the same value of points.

    What are you being ripped off? I'm confused, isn't this a loyalty scheme with no investment other than doing your shopping in the supermarket which you probably use anyway? I'm OK with my supermarket knowing what I buy. I also go to a local butcher and he knows what I buy as I don't hide my identity from him. I'm fine with the targeted offers because they are based on my habits and are relevant to me. The results can be amusing anyway; a supermarket in the UK used to mail me quarterly paper vouchers based on my spending. I used to think they were the items bought most often (usually bread and milk), however after opening one letter whilst in the supermarket I was worried about my lifestyle when it only contained vouchers for doughnuts and toilet roll.

    How is Fly-buys different then Woolworths rewards?

    Its all a rip-off if you ask me.

      Not really, you are getting free things from it, it just relies upon people, stupidly, buying everything from them in order to get more points... but if you just randomly earn $10 off your groceries every few months, it's still a saving, as long as you don't let them "reprogram" your consumption habits.

    I believe this article is incorrect when it says that Coles can sell your personal information to anyone it wishes. This is not only untrue, it's illegal.

    Great journalism.

    I Have worked for Coles for coming up for 8 years. Sure a lot of this is a rip off. I'm not denying that, but its a rip off that works. Especially this part - "What Coles is hoping is that you’ll buy additional items to crack the $50 limit"

    You would not believe the amount of times I've had people come through my register and spend say $24. And then go back and spend another $6-8 to get over the $30 limit and get a fuel voucher. Congratulations. You just spent $6 to save yourself $1.50 at the fuel station. And the idea that you can spend an extra $2 in the fuel station to get an extra 2c/L off. Sure it works if you have a 100L fuel tank. But people do it regardless. Trust me when I say that rip-off though it may be, Coles knows how to make its money. They aren't stupid, there are people earning a hell of a lot more money than me coming up with this stuff, and making sure it works

      A warning to all coles mastercard users. Before the new coles credit card was introduced with the new flybuys you could get an additional 4c/l off your petrol (8c/l). Now to get the additional 4c/l it costs you 500 flybuy points. See you later coles.

    I like to keep things as simple as possible so generally avoid all such schemes as this.

    For one thing there is a mental cost always having to remember to claim your points etc. And secondly it would be very easy to justify spending just that little bit more to earn extra rewards. In one of the examples above you have to spend almost $15,000 to earn $260. If line-ball purchases are swayed just 5% of the time say then you would end up spending an extra $750 to "earn" your $260.

    Finally, why would these companies offer such systems if they didn't result in customers spending more.

    If you have the willpower to not let it affect your spending habits (and honestly, it's not that hard, the bonus offers are always pretty shit), then the only question you need to ask is:

    How much is the privacy of your spending habits worth to you?

    If it's worth more than whatever amount you would save by using flybuys, then it's a rip-off. If it's worth less, then there's no reason not to use it.

    If like me you shop around and have both cards then basically it is free money, I prefer coles to wollies on a personal basis but will usually just go to the closest and If I can get free stuff for doing my normal shopping then tops to me.

    Nothing new...0.5% is a pretty standard return rate for most rewards programs.

    As I seem to be on every marketing lust known to humankind, I am not averse to Coles keeping tabs on my purchases to market their themselves to me in a way that I feel benefits us both. I have worked in advertising most of my life and the 'family business' was a direct marketing company, so I am aware of how often my info is circulated after singing up to just one company. It isn't a big deal; if they send mail, throw it in the bin. If they ema you, add it to the junk folder. If they call you, answer the phone, mumble 'yes, please go on' and then walk away from the phone for an hour - they all mark down which callers are too obnoxious to deal with and scrap you from their lists.
    As for flybys, I have been a member for over 10 years and have had the opportunity twice to renew my points for a $10 voucher but by the time I bothered to redeem them the points had expired. So I have NO idea why I always compulsively swipe the green card EVERYTIME I can, even for tiny $5 amounts, and get shirty with myself for buying petrol at a supplier that doesnt support the program. I think it's maternal guilt - mum urged me to sign up and she is extraordinary when it comes to saving, earning points, getting more than she paid for and generally being a downright miser with her money but still reaping the financial awards of a highflier. But let's face it, these programs are aimed at people like me who always swipe and never redeem, and only a very few like my mother are able to 'work' the system to their advantage.

    And to add to my above comment, I have recently moved house and haven't changed my flybuys address over. After seeing all of the advertising (and by golly there is a lot), imagine how crestfallen I was to open the mail box and find the shiny new silver envelope only to discover that it was addressed to the original occupants and not for me. So besides my complete lack of benefits gained from this program, I am still calling them tomorrow to have my new card sent out. The pathetic promise of a 0.5% discount after months of following their directions is just too much for me to ignore. That and Dawn French - they did well to score an actual 'celebrity' :)

    "Coles Express fuel stores (you earn 1 point for every $2 you spend on travel booked through the service)" That's it, I'm booking my next overseas holiday when I fill up! ;)

    This article only highlights that all reward programs are not good value if your spending to earn points.
    In a short period of time, none are good value however in a long period of time everyone will have enough points to get something that they would not have had otherwise. In S.A. there is a deposit refund on bottles of 10 cents. If you want you can get a refund on a single bottle at a time but that is more work than collecting over a longer period at getting a few dollars when you do take it in. Now how you feel about this is a matter if thinking. If it's a " deposit / refund" thing you many think of it as who cares, if you think of it as a " TAX refund" (which it is) because you have already given that money when you made the purchase, more people would want their tax back.

    the main change that the New flybys has that now turns your membership card into a rewards card. i.e. use your flybys card to redeem the points you've earned and converted into dollars.
    the down sides;
    You can't get the gift cards for gifts to anyone anymore
    You need to spend the whole redeemed amount in one transaction.
    The benefits;
    you don't have to wait for the gift card to be posted out
    Coles saves on postage, creating plastic gift cards, can monitor your gift card spending more closely, get the redeemed value spent at once

    wouldnt it save you more to shop around for higher priced goods to find discounts, following this you could easily save over the $260 ish a year and more. brand loyalty is poor in this regard

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