Nearly a decade ago every province in Canada passed some form of legislation that banned expiry dates and most fees on gift cards and prepaid cards. Canadians spend nearly $6 billion annually on gift cards and these regulations ensure that consumers get the full value of their gift card no matter when they decide to use them.
The expiry ban does not apply to loyalty cards used to collect rewards or points. But, given the outrage over Air Miles’ new expiry policy, it might be time to amend the Consumer Protection Act with respect to rewards points.
That’s exactly what Ontario MPP Arthur Potts intends to do, with a private bill that looks to establish fair regulation of loyalty points programs in Ontario. Under the proposed amendment, any rewards points that expire on or after October 1, 2016 under a consumer agreement will be credited back to the consumer.
*Note: The committee will hold public hearings in Toronto on Tuesday November 29th and welcomes oral presentations or written comments.
Protecting Rewards Points
A win here would be good news for millions of Air Miles cardholders, many of whom will see their reward miles expire under the new policy as early as December 31, 2016.
Banning gift cards from expiring is a no-brainer under the Consumer Protection Act because gift cards are a form of currency – they’re paid for with real money and should be treated as real money when they’re redeemed. Cash doesn’t expire!
Loyalty programs, on the other hand, are a bit murkier because they deal in points or rewards. It’s not as clear what the cash value of those points is and whether they should be treated as currency.
MPP Potts argues that under a consumer agreement, such as the one you enter into when you sign up for a loyalty program like Air Miles, the supplier provides rewards points to the consumer when he or she purchases specified goods or services or otherwise acts in a manner specified in the agreement.
Much like buying a gift card to be redeemed later for goods or services, it’s only fair that rewards points should be available to be redeemed whenever the consumer decides to use them.
When Air Miles introduced an expiry policy back in December 2011, it changed the rules and stated that all reward miles would be given a time stamp and expire if unused after five years.
Despite rampant pressure in the media and from collectors, the loyalty company isn’t backing down. In fact, one could argue that Air Miles has made it increasingly difficult for collectors to redeem their miles as the first expiry date draws near. Customers say the website is down intermittently, it’s difficult to navigate, and rewards are hard to find. Meanwhile, call centre wait times are measured in hours if you’re lucky, but sometimes it takes days to get through to a live person.
Not only that, Air Miles charges excessive fees to transfer reward miles to another collector – 15 cents per mile. Let’s say a collector whose reward miles are about to expire decides to transfer 10,000 miles to a friend or family member. It would cost $1,500, plus a $10 service fee, plus applicable taxes. That’s more than the reward miles are worth!
The private bill to protect rewards points sailed through two readings and is now before a standing committee. There’s also the proposed class action lawsuit put forward by JSS Barristers, which alleges that contrary to the reasonable expectation of Air Miles’ program members, earned miles will soon expire as a result of a change by Air Miles in the program’s terms and conditions. In addition, Air Miles has made it much more difficult for program members to redeem their earned miles before they expire, and made it much more likely users’ miles will expire.
An Air Miles collector might spend upwards of $300,000 to earn 20,000 reward miles. Those miles can be exchanged for travel, merchandise, or other rewards that are worth somewhere between $2,000 and $3,000. Expiring those reward miles would cause financial harm to this collector and contravene the consumer agreement to which he or she entered.
My hope is that government and or legal intervention will prevent loyalty programs from slapping expiration dates on their rewards points. Consumers act in good faith and spend real dollars to earn points that they expect to redeem for money, goods, or services. That’s why rewards points, just like gift cards, shouldn’t be allowed to expire.