Kroger Collects Data on 63 Million Customers and Sells It, Report Finds

In early May, Consumer Reports released an investigation into Kroger grocery stores, finding that it may be overcharging customers due to outdated sale tags that are no longer valid by the time they reach checkout. Now, Consumer Reports has published a second part to its investigation into the Ohio-based grocery giant, revealing that Kroger has been collecting data on its customers to track their loyalty and subsequently selling that data to the highest bidder. 

According to a statement shared with Food & Wine, Consumer Reports found that the grocery stores regularly “collect extensive customer data” and use it to make detailed predictions about customers via an “income predictor.” However, Consumer Reports discovered this can be inaccurate, with customers deemed to have “less education or with a lower income” receiving fewer of Kroger's best discounts.

Consumer Reports shared Hazem Salem's customer profile, which Salem obtained after making a formal request under Oregon's privacy and data laws. Consumer Reports reported that his data may have been shared with more than 50 companies across the United States, ranging from data brokers to tobacco brands.

Salem also discovered that nearly every piece of information collected about him was incorrect. For example, it identified him as a woman and stated he was a high school graduate, despite the fact that he holds a college degree. Kroger also presumed he earned around $66,000 a year, while Salem says he makes six figures, thus misrepresenting him almost entirely in its user data profile.

“Regardless of whether these consumer profiles are accurate or not, we need to rein in the rampant overcollection and misuse of consumer data and ensure that companies like Kroger are held accountable when they violate the trust of consumers and harm their pocketbooks,” Justin Brookman, director of technology policy at Consumer Reports, shared in a statement.

Consumer Reports noted that Kroger has the ability to track its estimated 63 million customers using sophisticated analytics tools via its loyalty program. Kroger then leverages this data via its “precision marketing” division to sell it for profit, which constitutes a significant portion of the company's overall revenue. This practice is completely legal and outlined in its privacy policy, which customers must accept to join the loyalty program. 

“Thanks to some state privacy laws, we can now gain more insight into the data practices of companies,” Brookman said. “It's especially alarming to see Kroger distributing customers' personal information so broadly. We urge lawmakers at both the state and federal levels to enact strong privacy protections and to prohibit the practice of surveillance pricing.”

For its part, Kroger shared with Consumer Reports that it doesn't personalize product prices, only the specific discounts it offers to its loyalty members. It added that the main factor in the discounts it offers is a “customer's prior purchases at Kroger stores and their interactions with Kroger.” However, it did admit to using “demographic or online behavioral data” to present customers “with the relevant offers that they can use to achieve greater savings at our stores.” It added, “Kroger presents customers with available offers that Kroger believes will be the most relevant and thus the most valuable to them.”

See the full report and findings at consumerreports.org.