Loyalty is a hot topic at the moment. But retailers need to be mindful of the wider privacy debate when deciding just how much consumer data to collect.

Last week’s front page story on Boots opening up its Advantage Card loyalty programme to other retailers has raised loyalty up even higher on the retail agenda.

Less than a year ago we reported on the raft of retailers launching or relaunching their loyalty schemes in order to try and reward customers who were feeling much less financially confident, and more importantly benefit from all the customer data these types of schemes deliver.

Since then Barclaycard has come in on the act with the launch of the loyalty programme for its cardholders when they spend at participating merchants. And now Boots says its plan to partner with other retailers to allow their customers to collect Advantage Points when they shop online initially, and in time at their stores, is at an advanced stage.

In general I’m an advocate of loyalty schemes. If consumers value the rewards, and retailers can analyse the data collected to make better business decisions then everyone can be a winner. The main sticking point is how much is too much information?

Look at the battering Facebook has taken in the past few weeks for the complexity of its privacy settings, and the fact that it was sharing what users thought was private information with third parties. It has had to promise to make changes which will begin to come into force from today.

And similarly, the introduction of identity cards is one of the first Labour schemes that the coalition Government is united on abolishing. There has been little, if, any, resistance from the general public or the press to the Government’s plans to do away with this.

Retailers need to tread carefully with loyalty schemes to avoid invading consumers’ privacy. And when schemes begin to knit together data on different aspects of their life – as the Boots scheme would if it is collecting data from multiple retailers – then these risks are amplified.

Take heed of the barrage of criticism that Facebook has faced if, unlike the identity card, you want consumers to value the piece of plastic you ask them to carry in their wallets.