After hearing endless complaints from Air Miles collectors, Liberal MPP Arthur Potts introduced Ontario’s a new Protecting Rewards Points Act, which eliminates expiry dates on loyalty programs to benefit consumers. The new law was approved on December 5th, 2016 and will come into effect in the new year. But before the new regulation comes into play, the government need to deliberate the best way to implement the changes and approach protocols on inactivity and devaluing points.
At the beginning of December 2016, Air Miles decided to discard the five-year expiry rule across the country. As per the legislation, the new Protecting Rewards Points Act must return to the Ontario consumer any expired points that were lost after October 1st, 2016. Nonetheless the expiry date was not the only issue with Air Miles.
Air Miles set up two categories, cash rewards for everyday usage for groceries or gas and dream rewards to purchase merchandises or travel, these points are not transferable to one another’s account. A good portion of the company’s profits derives from the difference of value between the two categories. Since the cash and dream rewards are redeemed at different periods of time, the company can no longer rely on the difference to make money. The value of miles for each category decreases. Each cash reward mile is approximately 10.5 cents and 13 to 15 cents for dream rewards. Therefore, Air Miles collectors can also expect more cash rewards than dream rewards as a response to the new bill on devaluing points.
Though this bill only applies to Ontario, the industry speculates other companies across Canada will end up cancelling their expiry policy. Starbucks has already announced that their reward program within Ontario will no longer have an expiry policy, along with WestJet and Lufthansa and the clothing store Talbots.
However, the new legislation will still allow these programs have policies that allow reward points to expire because of their age. For example, Air Miles applied a two-year rule. If consumers decide not to use their account within two years, due to the combination of time passing and inactivity your points can still expire. Loyalty goes both ways. Those who are not participating in the program are not doing their part as a consumer.