After overcharging for bread, should Loblaws demand ID for a $25 gift card?

Jenn Iskiw says she'll be grocery shopping elsewhere after feeling betrayed by Loblaws — twice.

First, for artificially inflating the price of bread for 14 years, and second, for demanding she send ID to get a $25 gift card offered as compensation for bread price fixing.

"It was bad enough they committed fraud," says Iskiw who lives in Victoria. "[Now] Loblaws is treating me like a criminal."

Many people across Canada who have received the ID request are incensed that they've been asked to hand over sensitive personal data to a company that's admitted to wrongdoing.

Loblaws says it needs the identity checks to weed out fraudulent claims for gift cards. But demanding ID may have been the wrong move for the retailer.

"All you're doing is making a bad situation even more difficult," says Simon Fraser University marketing professor Lyndsay Meredith. "This is a bit of a PR blunder."

Unless the risk of fraud is immense, Loblaws may be better off canning the identity checks and eating any extra costs, he says.

"Let it go. You're in enough trouble already. Why are you throwing gasoline on the fire?"

It's for your own good

In January, Loblaws started offering $25 gift cards after admitting its role in an allegedly industry-wide bread price-fixing scandal.

The retailer had estimated that three to six million customers would sign up, costing the company up to $150 million. 

In order to collect, customers have to fill in an online form providing details including name and address.

Many people have already received their card in the mail. But others have been told they need to either mail or send electronically a copy of their ID — such as a driver's licence or a utility bill  — or they won't get a gift card.

Loblaws says only a small percentage of customers are being asked for ID, and that this measure will benefit them.

"We are distributing tens of millions of dollars in Loblaw cards — a natural target for fraudsters," spokesperson Kevin Groh said in an email.

"Checking ID confirms that we are dealing with a real person, and not someone using their name or taking money that could otherwise go to them."

But numerous people refuse to believe handing over ID is in their best interest.

"They might have not thought this one through well enough," says retail and marketing expert Brynn Winegard in Toronto.

"It just gets feeling smarmy when it's fraud that they committed and they end up with people's utility bills or whatever. It feels invasive."

She says another problem is that Loblaws is subjecting only some people to identity checks. The retailer hasn't explained its selection process.

"People feel attacked."

Winegard says Loblaws made a smart move when it offered customers a rebate as compensation for inflating the price of bread. But she says this ID request now makes the company look like a sore loser.

"You do this really nice overture, but you make people jump through hoops," she says. "You should do this in good faith and with good grace."

Where's my ID going?

Another problem Loblaws faces is that customers are concerned about security risks when sending off a copy of their utility bill or driver's licence.

"Where does my driver's licence end up?" asks Iskiw. "People are experiencing identity theft all the time."

After receiving complaints about security concerns with the ID request, Canada's privacy commissioner has launched an investigation.

Marketing expert Meredith says people are becoming wary about handing over their data owing to the constant harvesting and sometimes abuse of personal information in the digital age.

"Starting to demand ID is not exactly the kind of behaviour that's going to endear you to consumers."

Loblaws insists customers are in good hands. Its spokesperson Groh says the retailer is "following all of the necessary privacy measures" and destroying ID following verification.

However, security breaches do happen. Just this week, Loblaws PC Optimum rewards member Kim Curry of Fraserville, Ont., was informed that due to a technical error her account may have been combined with someone else's, compromising her name, address and phone number.

When will it end?

Both Winegard and Meredith believe that in the long run Loblaws will weather this PR problem. Winegard points out that Loblaws-owned stores — which include Superstore and Shoppers Drug Mart — are ubiquitous and difficult for many customers to avoid.

"If they don't forgive, they'll certainly forget," she says.

Until then, Meredith suggests Loblaws could minimize any damage to its brand by abandoning ID demands if the risk of fraud doesn't jeopardize the gift card program.

"Bury this sucker," he says.

But even if Loblaws gives in, Iskiw says that won't be enough to bring her back to its stores.

"The damage has already been done," she says. "I'm always going to remember that Loblaws made me feel like I was committing fraud."