Australian regulator okays controversial loyalty card mailout - report
SYDNEY Jan 30 (Reuters) - Australian airlines Qantas Airways Ltd and Virgin Australia Holdings Ltd have been given the go-ahead for controversial plans to send unsolicited and potentially illegal debit cards to their millions of frequent flyer members, according to a report.
Corporate regulator the Australian Securities and Investment Commission (ASIC) has given the airlines a "no-action" letter regarding the cards, meaning they do not plan any regulatory response, according to Compliance Complete, a Thomson Reuters publication.
The cards, which are described by the airlines as "prepaid cards" and by ASIC as stored-value cards, are new "chip and PIN" enabled frequent flyer cards that the airlines are launching in conjunction with their partners in the banking and payment card industries.
Lawyers told Compliance Complete the card mail-outs were likely to breach laws governing unsolicited offers of financial products, but ASIC's no-action letter meant the matter was unlikely to ever go before the courts.
ASIC said the kinds of cards being distributed did not exist when the law was enacted and it had imposed a number of conditions around opting into the stored-value facility of the card and acknowledging the risks of the products.
"The risks (including financial risks) for the consumer in being sent one of these cards are low and are certainly much lower than the risks involved where a credit card or debit card linked to a deposit account, such that the card can immediately be used to access the consumer's funds, is sent to a consumer," ASIC said in a statement in response to the article.