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Many companies offer reward points programs to thank customers for their loyalty.

Through these programs, you can earn reward points based on your purchases, accumulate the points over time, and exchange your points for goods or services at a later date. Many consumers use these programs in the hopes of accumulating enough points to cash in for an exciting vacation or big ticket items that they may not consider purchasing on their own.

On January 1, 2018, Bill 47, the Protecting Rewards Points Act (Consumer Protection Amendment), 2016, came into force.

The Act comes in response to outrage by consumers surrounding expiry dates on rewards imposed by programs like Air Miles. You might recall that, in 2011, Air Miles announced a new policy that stated that, as of December 31st, 2011, all Air Miles reward miles in a customer’s account would have an expiry date of five years. This meant that any reward miles that had been earned before December 31st, 2011 would need to be redeemed by December 31st, 2016 or the points would be lost. By imposing an expiration date on reward points, rewards programs force consumers to redeem their points more regularly, limiting their ability to save points over time to put towards bigger rewards.

The Act addresses the imposition of an expiry date on rewards points and amends the Consumer Protection Act, 2002 (Ontario) (the CPA) to prevent the expiry of rewards points based on the passage of time alone. In 2007, Ontario made a similar law, which banned expiration dates on gift cards.

What You Should Know

The Act will apply broadly to rewards points programs, including retailer-specific rewards programs like Starbucks Rewards, multi-retailer programs like PC Optimum,+ and rewards programs associated with credit cards. 
The logic behind the new law is that under a consumer agreement, such as the one you enter into when you sign up for a loyalty program, the company provides rewards points to you when you purchase specific goods or services. As a result, much like when you buy a gift card to be applied to purchase goods or services at a later date, it’s only fair that rewards points should be available to be redeemed whenever you decide to use them.

The Act will have a retroactive effect, which means that any of your rewards points which expired on or after October 1, 2016, will be credited back to you if they do not fall under one of the exceptions under the Act. However, the new law is not a complete ban on the expiration of points.

Your reward points may still expire if:

  • the reward program closes your account when you have been inactive (when you have not earned or redeemed any points) for a long period of time and this is stated in the membership agreement;
  • the program issues a voucher as a reward (for example, a discount on a purchase) that is considered a gift card and cannot expire; or
  • the reward points can’t be redeemed for any single item or service with a value over $50.

As such, before you sign up for a rewards program, you should make sure you read the agreement and understand what you need to do to earn points, what you can use them for, and if there are any limits or conditions on redeeming your rewards. For example, some programs have blackout periods during which you cannot use your points or require you to make a purchase or interact in the program every twelve months to ensure your points do not expire.

Reading the Fine Print

Banning the expiration of reward points is one of a number of changes Ontario has proposed to increase protection for consumers, including adding new protections for new home warranties and condo owners, which we discussed in September of 2017.

This new law is a victory for consumers who may have otherwise lost their previously collected points. However, it is important to remember to read the fine print of any agreement you enter into. Whether you are signing a mortgage, buying a car, or clicking “agree” to the terms and conditions of your Starbucks Rewards program, the words in those contracts have legal meaning and may have important consequences to you in the future.