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The fallout from the AIR MILES expiry debacle continues: last year, the Ontario provincial government responded to the coalition loyalty program's instituted-and-then-reversed points expiration policy by proposing and then passing a ban on loyalty points expiry in the provice. Now Quebec is joining the party, with the Montreal Gazette reporting that Bill 134, which will ban loyalty points expiration in the province, went before the National Assembly last week.
By Rick Ferguson
The bill, introducted by Minister of Justic Stephanie Vallee, came in response to a demand from the Coalition avenir Quebec, a center-right provincial political party, to more tightly regulate loyalty programs. In making its demand, the CAQ specifically used LoyaltyOne, AIR MILES' parent company, as an example of why loyalty programs need regulation. Money quote from the Gazette:
"The CAQ used LoyaltyOne, which operates the Air Miles program, as an example. The company announced last year that points would expire after five years, but then backed away from the uproar. It also reduced the value of certain travel- and cruise-related items in January on the ground that these services required more customer service. Parti Québécois MP Maka Kotto asked Vallée to act swiftly, saying any loss of points amounted to a net economic loss to the consumer."
Bill 134 does allow loyalty program operators to alter program rules provided that members are first notified in writing - an allowance that prompted CAQ's Simon Jolin-Barette to say, "[The bill] does not go as far as what was proposed. On the other hand, it does take steps for the consumers."
Given that the Ontario expiry ban passed, the smart money is that Bill 134 will also become law. The financial impact of these expiry bans cannot be overstated; even as some loyalty programs move toward a no-expiry policy voluntarily, the financial health of many loyalty programs have long depended on a certain amount of "healthy" breakage as unredeemed points expire and the points liability falls off the books.
There are two responses to this increased regulation. One response is to make up for the lack of breakage by devaluing your points; that's what LoyaltyOne has stated they'll do in response to the Ontario expiry ban. The other response is to encourage points redemption to drive profitable behavior change - after all, in a perfectly-designed loyalty program, every point would be redeemed as customers enjoyed the rewards and recognition, and responded with increased lift, yield, and retention.
The reason why Canadian legislators are proposing expiry bans is because, rightly or wrongly, consumers had come to believe that program operators were betraying their trust. By refocusing programs on their original and intended purpose - demonstrating loyalty to best customers - those same operators might begin to win back that trust. Here's hoping.
Rick Ferguson is CEO and Editor in Chief of the Wise Marketer Group.
