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Ontario Bill To Protect Rewards Points Passes Second Reading

Protecting rewards Points ActThe Protecting Rewards Points Act (Consumer Protection Amendment), tabled by Ontario MPP Arthur Potts, passed its second reading on Thursday, October 27th.

In a seeming reaction to the Air Miles decision to automatically expire Collector points after 5 years, Bill 47 proposes to amend Ontario’s Consumer Protection Act of 2002, so that companies can no longer expire consumer rewards points.

The Proposed Protecting Rewards Points Act, Bill 47

The act itself states the following:

47.1  (1)  Subject to subsection (2), a consumer agreement under which rewards points are provided shall not allow for the expiry of rewards points.

Expiry of consumer agreement

   (2)  All of a consumer’s accumulated rewards points expire when the consumer agreement is terminated, unless it provides otherwise.

Retroactive effect on expiry of rewards points

   (4)  On the day this section comes into force, any rewards points that expired on or after October 1, 2016 under a consumer agreement shall be credited back to the consumer.

Meaning and Impact of Bill 47

If passed, Bill 47 will have far reaching implications on some of the biggest players in the rewards and loyalty industry:

  1. The bill would effectively protect consumers in Ontario from having their Air Miles expired. Air Miles’ first tranche of points expire on December 31, 2016. However, the proposed Bill states “any rewards points that expired on or after October 1, 2016 under a consumer agreement shall be credited back to the consumer”. As a result, it seems the proposed bill would prevent the impending Air Miles points expiry from taking effect in Ontario at all.
  2. The bill would seemingly impact other significant players with fixed term expiry policies (e.g. WestJet Dollars expire after 5 years) and/or inactivity expiry policies (e.g. Aeroplan, Plum, HBC, Sears points expire if you don’t earn or redeem a point within 12 months).
  3. The bill does not seem seem to impact the vast majority of credit card rewards programs that expire your points upon account closure, as the Bill reads “all of a consumer’s accumulated rewards points expire when the consumer agreement is terminated, unless it provides otherwise.”
  4. We’re not sure what happens in cases of point forfeitures. For example, if you’re delinquent on your American Express card, your points get forfeited, until your account becomes current. At that point, you can request your points get re-instated, which Amex typically does without issue.

The Bill as proposed would definitely benefit the majority of consumers. It would certainly end the 5 year automatic point expiry policies, as well as the 12 month inactivity expiry policies.

Our only hope, is that it doesn’t have any unintended consequences. If the Bill impacts the profitability of programs to such a degree that they devalue their programs, will consumers be happy? What work-around policies will loyalty companies put on place to make up for the increased cost of operating their programs and maintaining the financial reserves required to fund their liabilities?

Potential Loophole

That said, it seems Bill 47 may have a loophole companies can exploit if they decide to terminate a consumer’s account, instead of merely expiring their points. As we mentioned above, the Bill specifically states that points can be expired, if the consumer agreement is terminated. Instead of expiring points, companies may start terminating accounts.

For example, currently some companies expire points if a customer has neither earned nor redeemed a point in a 12 month period. Instead of expiring points, companies could terminate consumer agreements at the end of 12 months, if  points had not been earned or redeemed in the past year.  Perhaps they do it after 24 or 36 months.

Loyalty companies would have no problem, and every incentive, to terminate agreements with inactive customers who have significant point balances.

However, such behaviour would still seem to violate the spirit of the Bill, which, according to its sponsor Arthur Potts, is if “someone has paid for a product, they’ve got some reward points, they should be able to use them.”

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