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

    Totally agree I use theColes source card as its easier to pay my shopping monthy than eft pos each time I shop for every $30 I spent they sent an vouchers for an extra 4 cents of petro with the accountl .Last month got on line and tried to print out the vouchers(I did the right thing and went paperless)and was told the petrol vouchers can be purchased on flybuys for 500 points each .So you apply spend your points and then they will send the voucher in the mail.How useless is that I wanted petrol yesterday not next week.On a pension that was a little help but now they can keep it .The flybuys will probably never give me a reward as looking at the reward scheme I will be long dead before I have enough to even buy a movie ticket

    I work for flybuys and i dont understand this complaining. flybuys is a free program. If anybody had actually read the terms and conditions of flybuys you would know that your personal information is not sold. As for my5 being a con rip off, its 10% off of items that you frequently buy anyway, whats wrong with that? it doesn't matter how long it takes you to get a reward, IT'S FREE! as for the fuel vouchers, if you have a problem with redeeming flybuys points for them contact GE Money. They are the ones that stopped giving you the vouchers. We didnt want customers to miss out so we created this reward. I honestly didn't think that there would be that many brick heads out there that are trying to hide with their tin foil hats because of government conspiricies. GROW UP! stop complaining. IT'S FREE!

    One FlyBuys point is only worth approx HALF A CENT !!!

    I've been a member of flybuys for years and years....and can honestly say that for years I have said I must be the only person in the world gaining anything at all...We shop at Coles, occasionally Target/Kmart, and have always had our NAB visa connected to the flybuys. Given we put everything on our credit card, which we then pay in full monthly, our entire beach house was furnished with free appliances gained from flybuys points. A connected credit card is the way to go...we earn points really quickly. The my 5 though...definitely a rip off and not worth the effort !

    As a single older person, I don't spend a lot on groceries (like families do), but for years I've used my Flybuys card at Coles; Shell; Liquorland; Target; etc., and earned many points that I've cashed in for gift cards - which have been really great !
    My current Flybuys card is also linked to an NAB credit account - which has an annual card fee of $30.
    This credit card has also contributed to many of the points I've earned - BUT- after 31st October it will no longer earn points, as the NAB have a new linked card - which has an annual card fee of $65 !
    THIS IS MORE THAN DOUBLE THE FEE FOR THE CURRENT ONE !!!!!
    So, with the need to earn so many points in order to get very small returns, I can't see that the new Flybuys card is worth the effort - especially not the NAB linked Flybuys card !!!

    - which after October 31st, will not earn points.

    and just reading through all the 'lifehacker' info not to change my flybuys card to the new NAB linked card. Instead of the $30 annual card fee they want to charge $65 for the new linked NAB Flybuys card

    Angus - valued reading your blog. I guess I was in the category of "you spend the money may as well get the rewards" and under the old system we redeemed a dozen wine a couple of times a year. What rather annoys me is all the hype about getting more 'Points' per dollar spent, but not making it clear that the new 'Points' are worth less than the old points. You might reasonably combine those words Angus! Now I have just received mail from my bank encouraging me to change from my old visa card to a new one. The benefit being on the new card $1 for each $1 spent compared with the old 1 point for every $3 spent. Sounds great until you consider the value of the new card. And this bank is upfront with its advertising "More Give and less take". Sounds good - but the new visa card charges an annual fee of $65 compared with the old $30. Thats more than double. It looks a lot like more take and less give. In fairness to the bank - which I havent named - I am waiting to hear their response to my concerns on this matter.

    I should have added to my last comment that it looks like we are only half way to redeeming a dozen bottles of wine and half way through the year. I havent worked it out, but it really does look like the new system is worth significantly less than the old one.

    Really a rip off about the Coles MasterCard Fuel Reward. Redeem 500 FLYBUYS points ($2.5 worth) to have only 1 transaction of 4cents voucher. (if your fuel tank only 60 litre, then can save you $2.4). From my first ready, I thought it is for all the transaction in the next 180 days shopping at Coles to have a extra 4 cents voucher. But find out is 1. Then why should I redeem? Unless I have a 62 Litre fuel tank car?

    the local coles here in regional victoria bumped up the price quite a bit on cube boxes of soft drink when the new cards were issued - obviously it sells well at the shop .......... also NAB have offered a new credit card that will accumulate flybuys after October ( current card ceases to accumulate then ) but it has doubled the annual fee on that card .. doesn't have any other incentives offered to counter the hike

    with my good 'ol Flybuys card, I could rely upon ending up with enough credit to buy the nieces and nephews movie ticket vouchers at Xmas time each year - not happy with the new process at all
    and certainly don't like the invasive selling and information gathering - we are all being milked on every level today. But lean back and love it, there's no way out - now. thanks for a great article

    this is all good info and all true but i am a happy fly buys customer and my thought is if i am spending the money anyway why not get the rewards, i never buys things i dont want need just to get more points and with 2 cars and a family to feed i have got 30 fly buy dollars with in 6 months without going out of my way to spend money i didnt want to spend

    Agree with Kev. Don't redeem. Really a rip off about the Coles MasterCard Fuel Reward. Redeem 500 FLYBUYS points ($2.5 worth) to have only 1 transaction of 4cents voucher. Terms and conditions do not clearly state it's one off voucher particularly when we used to have the 4cents on receipt plus 4cents from the statement a month later. I believe a lot of people are misled by the promotion. It's really a misrepresentation and scam when you go through the calculation. Would be interesting to know how many more people are falling in the trap like me and thought it's applicable for every spending in next 180days after redemption. Believe ACCC should take action on this blatantly misrepresented advertising not telling clearly the real picture!

    my 5 is a rip off if your single you don't spend $ 50

    it's only a rip-off if you're not shopping wisely, and/or you are changing your shopping habits to try to get these rewards. I do most of my groceries at coles (may go to butchers or fruit shops etc if considerable price differences) but try to buy things on sale more often than when they're full price, so I'm getting the stuff for the same or less as I could anywhere else and therefore not spending any more money than I have to, plus I get an extra discount because I work at Target. This means I am getting my groceries for the same or less cost than I could elsewhere, so by using flybuys on what I do buy from Coles and would be buying there regardless of the flybuys program or not, I get a small bonus every few months for nothing. That's hardly being ripped off. Only idiots get ripped off by these systems

    My daughter & I are among the "we shop there for those items anyway so might as well get the points" group. Leading up to Christmas we would cash in the points for gift cards to use on special treats. The new scheme does not allow that anymore as there are no longer Coles/Myer cards. Funny how a company has a promotional scheme that does not promote their own company!! Our shoppng habits have not changed - we still shop for the best discounts at either Coles or Woolies. The points were an additional bonus that are coming under serious review.

    I was wondering why I wasn't earning any points from Coles express. Finally I found it in the small print 'and where payment is made with Shell Card, Fleet Card, or Motorpass and Motorcharge Cards.' So why do they keep scanning my flybuys card when I pay using Visa! trying to maintain the illusion that I am earning points. No more coles. I'm switching to Woolworths and their reward program. Prices are pretty much the same.
    I also noticed that the bonus offers to try and get you to spend more are based on your current spend. So people who may spend on average $50 get and offer of 500 bonus points to spend $80. we spend around $100 a week so our bonus offer of 500 points required us to spend $130! Suddenly the bonus offers and the data they collect starts to make sense.
    Good bye Coles!

    Heh, wait till Coles/Woolies monopolise everything, then

    LET'S FUCKING RIOT

    But yeah, this article has some good pointers, even if flybuys is optional.

    I got an email from Coles saying spend $110.00 over the weekend and get 500 bonus points.
    My Mum gets the same email and it says spend $50 over the weekend and get 500 bonus points.
    How the hell do you explain that you ripoff merchants

      It depends on your average spending in Coles plus they add more. I got the same voucher and I need to spend $190 which I never will. So I normally spend around $140 but they put a bit more. However, the verdict is that you don't spend that much money only to get the points, so use only the vouchers that offer triple or double points on a single shop of your choice or for a specific product.

    With three family members earning points on our flybys account, we've converted our points into flybys dollars to cover our entire christmas day lunch spend.

    I ask myself why do they want to collect my information?
    The answer is to maximise the amount of money they can get from me.
    Already the occasional discount vouchers they post out have changed from spend $30 or more and get double points to spend $80 or more to get the same benefit. I almost never spend $80 in one shop trip.

    Hey people! You can ignore 'the big guys' to a large degree. None of you have mentioned shopping at Aldi! You get value for your buck. For eg. I buy milk there for $4.50 for 2 litres. At my local IGA the same milk is $5.60! Why do they think I would shop there? If you want to earn ff points get a Qantas card. This is getting harder because I tired to open Nab Gold Qantas credit card but guess what? They dont have that product any more!

      But Iris, Coles and Woolies milk costs $2 for 2 litres maybe you should shop at these big guys for a change.

    We recently joined as we use a lot of the partners. We had an offer to get 500 points if I filled up 50 litres of petrol before 1st May. I did this and they didn't honor the offer. If this is the way they honor new members then they can go **** off.

    This post is too old.. Please make a new one and compare the new products/features of fly buys

    I earned more than 200,000 points in bit more than two years with flybuys and coles credit card. That's worth $1000. which I redeemed as Jb hifi gift cards (10x$100). For me it was worth getting credit card and using flybuys. there is always a trick to earn more points. :)

    Over the last 15 or so years we have been in Flybys, for 2 people we have had flights from Brisbane/Cairns, Melb/Perth, Melb/Darwin, Sydney/Airlie Beach and today Albury/Brisbane and we have cashed in points for Visa credit. We shop at Coles mostly and Aldi/Woolies, petrol from Shell and we pay for everything by NAB Visa. I think we have done very well out of Flybys . We have to buy this stuff anyway so it's no biggie, we try to always use Flybys, but we don't go out of our way or buy anything just to get points.

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