Loyalty programs have become increasingly popular amongst Canadian consumers and at the same time serve as an important marketing tool for businesses of all sizes, across almost all sectors. As of January 1, 2018, in Ontario, new regulations designed to restrict the expiry of rewards points collected by consumers while not impeding strong competition among loyalty programs operating in Ontario are set to take effect.
So, what items should you be aware of in regards to the changes coming?
- The key feature of the regulations is a ban on the expiry of loyalty points based on time alone, which means that points can still expire because of the passage of time, but there also must be a second reason. For example, your reward points user agreement may stipulate that you must use your account within a specific time frame and if you do not, your points could expire due to the combination of time passing and inactivity.
- The legislation passed in December 2016 was retroactive to October 1, 2016, so any points that expired on or after that date solely for reasons of the passage of time must be credited back into the member’s account.
- The Act does not apply in the following situations:
- to a rewards program where no one good, one service or a single set of goods or services that the consumer may receive in exchange for redeeming the points has a value of more than $50.
- to reward offers that propose to provide a consumer with one specific good, service or one set of goods and services after the consumer achieves a certain amount of progress if the goods or services are identified at the outset of the offer and they are not a gift card, voucher or similar item are excluded. Stamp cards for coffee or a specific kitchen cookware set are examples.
To ensure compliance with the law, review and update your terms if operating a reward points program. The full Ontario regulations can be found by clicking here.
While Ontario is currently the only jurisdiction in Canada to have this type of restriction, Quebec has passed legislation and is now finalizing what are expected to be similar regulations. Prince Edward Island also has proposed legislation that is making its way through its legislative assembly. CMA continues to monitor and engage on this issue.