Consumers To Sue Safeway For <i>Not</i> Using CRM Data For Recalls

Spurred on by the efforts of Costco, ShopRite, Wegman's and other grocery chains to use CRM data to alert customers to product recalls, a consumer group said Thursday (May 6) it is about to sue the $41 billion 1,712-store Safeway chain because of the its "failure to notify consumers that they've bought potentially dangerous products [which] violates state consumer protection laws in Texas, the District of Columbia, New Jersey and California."

The trend to use loyalty card data for product recalls is nothing new. Much of the motivation stems from a lawsuit against Kroger a half-dozen years ago. A customer of the chain ate beef contaminated with Mad Cow disease even though Kroger supposedly had more than enough time to have alerted her before she consumed the tainted product.

Since then, many chains have made the transition, including Giant, Harris Teeter, Price Chopper, ShopRite, Wegman's and Costco. Costco has pushed it the most aggressively and also has been among the most visible proponents of using CRM data to communicate recalls. Some observers have suggested the recall programs strongly reinforce loyalty messages, while others point to mobile as the best way to notify customers.

On the other side, though, are retailers, who have strong worries. Once they assume the role of notifying consumers, what if someone gets missed? In a court case in Los Angeles, Macy's resisted using CRM data to contact customers who had purchased lead-encrusted children's jewelry, worried that some consumers might find it an invasion of privacy.

The nonprofit Center for Science in the Public Interest (CSPI) is the group threatening Safeway with litigation, unless the chain agrees to immediately start using its loyalty card data to alert customers to recalls.

"It shocks the conscience that a major retailer would sit on its hands, even though it has easy access to the E-mails, addresses and phone numbers of those who have purchased food that might be contaminated," said CSPI Litigation Director Steve Gardner. "Perhaps Safeway saves a few pennies by remaining silent. But why would you knowingly risk letting your customers fall ill or, worse, die?"

Some chains have been worried that their data is organized in such a fashion as to make it very difficult to get notifications out in a sufficiently timely fashion. Still, with so many chains already having taken the plunge, that argument seems weak.

CSPI issued a statement in which it tried to use Safeway's own Web site policy against the grocer. "According to the privacy policy on Safeway's Web site, Club Card data 'may be used to help make Safeway's products, services and programs more useful to its customers.' And the company reserves the right to 'disclose personal information to our related companies and third parties,'" the statement said. "Yet, even when it has sold foods that might have been contaminated with E. Coli, Salmonella, botulism or other deadly hazards, Safeway does not use its Club Card information to prevent customers from eating that food."