Pointshogger on CityNews Talking about the New Bill Aiming to Stop Expiry on Reward Programs
Yesterday, we had a part in a news report by CityNews about the Liberal MPP’s bill to stop expiry of rewards points passes second reading.
Putting a Stop to Expiry Policies
Remember back in 2007, the Ontario provincial government banned expiry dates on gift cards. Now they want to ban expiry policies of loyalty programs. Bill 47-Protecting Rewards Points Act has passed its second reading unanimously and without resistance. So I suspect that there is no stopping this!
As indicated in the news report, this move by the government is mostly due to the unhappiness with Air Miles. Seeing as this is only from the Ontario government, I am guessing that this will not affect companies that are headquartered in another province?
List of Headquarters
I did a quick research on some of the major Canadian loyalty programs and where they are based:
|
Loyalty Program |
Headquarters |
| Aeroplan (Aimia) | Montreal, Quebec |
| Air Miles (Loyalty One) | Toronto, Ontario |
| Aurora Rewards (Canadian North) | Calgary, Alberta |
| Esso Extra (Imperial Oil) | Calgary, Alberta |
| PC Plus (Loblaws Companies) | Toronto, Ontario |
| Petro-Points (Petro Canada) | Calgary, Alberta |
| Plum Rewards (Indigo Books and Music) | Toronto, Ontario |
| Scene (Cineplex Entertainment) | Toronto, Ontario |
| Shoppers Optimum (Loblaws Companies) | Toronto, Ontario |
| WestJet Rewards (WestJet Airlines) | Calgary, Alberta |
| VIA Preference (VIA Rail) | Montreal, Quebec |
| VIPorter (Porter Airlines) | Toronto, Ontario |
Pros
The only real pro is that we won’t have to worry about expiry policies anymore. This will be in line with Delta Air Lines’ SkyMiles program, as well as one of my favourites, Best Western Rewards.
Cons
However, something has to give. Loyalty companies need to make money, or else they will go bankrupt and no one wins. However, it’s no secret that they make a lot of money from expired miles and points. So if they were suddenly forced to change their expiry policies, then they will need to recover those lost earnings some other way.
I am going to expect things like:
- Devaluations to reward programs
- Elimination of sweet spots
- Possible bankruptcies to reward programs, or mergers (which could be a good thing)
Conclusion
I can’t say that I am optimistic about this move, because I strongly suspect that loyalty companies are going to readjust their business model so that they can recover their lost profits somewhere else. I can’t really see how this ends well with customers looking to gain more value out of loyalty programs.
But I do understand that this will cater to the masses.
What are your thoughts about this new law?
I think this would apply to any company that offers rewards programs to Ontarians, not just those headquartered there (though I’m not sure about companies that are clearly under federal jurisdiction, such as airlines, railways and banks).
Either way. Every interesting to see how this will play out!
Government role should be to provide a level play field so companies can compete. Not sure how this will pan out adding more restrictions to the limited options available in Canada (vs USA) of program rewards.
All the more reason to constantly keep your portfolio diversified!