Card mail out from Qantas and Virgin affects one third of Australians

Australia's two largest Airlines Qantas and Virgin Australia have been given the green light regarding plans to send millions of unsolicited prepaid debit cards to their frequent flyer member bases.

According to Nathan Lynch of Compliance Complete ASIC has recently approved the most extensive mail out of unsolicited MasterCard and Visa products in Australia's history.

The Qantas mail-out alone could see more than a third of Australians receive a Qantas Cash product in the mail including children aged 16-18. In Virgin's case, the unsolicited cards are going out to all eligible Velocity members aged 18 or older.

Consumer advocates and financial services lawyers have been stunned by the regulator's decision to give the airlines the go-ahead to launch their unprecedented prepaid debit card campaigns. They said that although the card mail-outs were likely to breach s12DL, ASIC's apparent decision to provide no-action letters to the airlines meant the matter was unlikely to go before the courts.

Both Qantas and Virgin have chosen to position the cards as upgraded loyalty cards, with the financial product embedded on one face of the new chip-and-PIN-enabled membership cards. When consumers turn their membership card over it looks like a traditional Visa or MasterCard facility, including a credit card scheme logo, card number, CVC, chip functionality and signature strip.

The main compliance concern with these products is that they are being sent out, unactivated, to frequent flyer scheme members without their "opt-in" consent. The airlines argue that the cards can simply be used as a frequent flyer card if the member does not wish to activate the payments functionality.

The Qantas Cash and Virgin Global Wallet products are examples of the new two-sided frequent flyer cards that airlines are launching in conjunction with their partners in the banking and payment card industries.

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