Own Wesfarmers shares? Here's why Bunnings is in hot water this week

Wesfarmers is getting some unwanted attention from its Bunnings operations.

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Wesfarmers Ltd (ASX: WES) shares are in the red today.

Shares in the S&P/ASX 200 Index (ASX: XJO) retail stock – whose subsidiaries include household names like Bunnings Warehouse, Kmart Australia, Officeworks and Priceline – are down 0.48% at $70.83 apiece.

For some context, the ASX 200 is down 0.3% at this same time.

Created with Highcharts 11.4.3Wesfarmers PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.com.au

That's today's price action for you.

So what's all the noise about Bunnings?

Wesfarmers shares in privacy breach

If you own Wesfarmers shares, then you own a stake in Bunnings as well.

And Bunnings has just run afoul of Australia's privacy commissioner.

As ABC News reported, Bunnings use of facial recognition from November 2018 to November 2021 across 63 stores in New South Wales and Victoria was found to have breached the privacy of hundreds of thousands of customers.

That's because Bunnings did not have their consent to use facial recognition technology.

The fallout for Wesfarmers shares appears limited.

The privacy commissioner determined that Bunnings cannot repeat the practice and will have to explain to customers, via its website, how it was using facial recognition technology and why it was wrong to do so.

"This decision should serve as a reminder to all organisations to proactively consider how the use of technology might impact privacy," commissioner Carly Kind said. "Any possible benefits need to be weighed against the impact on privacy rights."

Bunnings response

In a media release deemed non-price sensitive to Wesfarmers shares, Bunnings said it would seek a review of the privacy commissioner's determination before the Administrative Review Tribunal.

Managing director Mike Schneider said, "The electronic data was never used for marketing purposes or to track customer behaviour." Rather, he said, it "was all about safeguarding our business and protecting our team, customers, and suppliers".

According to Schneider:

We had hoped that based on our submissions, the commissioner would accept our position that the use of FRT appropriately balanced our privacy obligations and the need to protect our team, customers, and suppliers against the ongoing and increasing exposure to violent and organised crime, perpetrated by a small number of known and repeat offenders.

As for breaching customer privacy without their knowledge, Schneider added:

We believe that customer privacy was not at risk. The electronic data was never used for marketing purposes or to track customer behaviour.

Unless matched against a specific database of people known to, or banned from stores for abusive, violent behaviour or criminal conduct, the electronic data of the vast majority of people was processed and deleted in 0.00417 seconds – less than the blink of an eye.

Despite today's underperformance, Wesfarmers shares have amply rewarded stockholders over the past year, up 33%.

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Wesfarmers. The Motley Fool Australia has recommended Wesfarmers. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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