New bill in Ontario could make points & miles expiry illegal

The CBC ran another piece on the whole AIR MILES expiry issue today about Bill 47 in Ontario. The bill wants to make it illegal for programs to expire miles. While it would only be in effect for Ontario residents if it passes chances are it would spread across Canada just like the issue of Gift Card expiry many years ago. We were interviewed by CBC for this article yesterday and some of our comments made it into the article.

The fact of the matter is very few programs in Canada actually have Expiry rules when it comes to their loyalty currencies. In our guide to Expiry and Inactivity Rules of Canadian Loyalty Programs, you'll see that only 4 out 16 programs we examined have expiry rules. AIR MILES, WestJet, MyHusky Rewards and Starbucks. The rest don't expire your miles if you are active in the program. We are opponents of expiry but are supporters of inactivity rules. Of course, Canada's largest loyalty program, AIR MILES, just happens to be one that will expire miles and that kicks in on January 1st, hence all the media surrounding it this year. There are differences between Expiry Rules and Inactivity Rules and we hope that if this bill is introduced it takes these into account and only locks in the Expiry Rule portion. Dec 1 Update: Aeroplan reached out to us to let us know that this bill will not touch inactivity rules, so it is only Expiry that is on the table

Inactivity

Inactivity expiration happens when you have not been active with a loyalty program for a set amount of time. If you are not active with a program you stand to lose all your miles and points and have your account closed.

Expiry

Mile/Point Expiry differs from the inactivity rule in that it affects the points and miles in your account even if your active with that program. Effectively Mile/Point expiry is a date stamp on those you have earned and they will expire after the time set out by the program if you don't redeem them.

(Source: Rewards Canada's Guide to Expiry and Inactivity Rules of Canadian Loyalty Programs)

If you are not active in a program, outside of extenuating circumstances like a medical issue, we are fine with a program closing your account and pulling your miles and points. If you haven't earned or redeemed a point or mile in a 12 to 24 month period then there is a reason why you aren't using that program and yes the program should do that house cleaning. However if you are active in a program, even just on the earning side, you are helping that program's bottom line. Many of you have been collecting AIR MILES since they launched in 1992 and some of you have not redeemed. You are adding to LoyaltyOne's pockets by earning those miles since AIR MILES are sold to their sponsors (and this is on top of those sponsors paying an initiation fee and marketing fees) but those miles are a liability on their books albeit one that on a per mile basis is less than than what those sponsors paid for it. Although not public, we have heard that sponsors pay somewhere in the neighbourhood of 20 cents or more per mile and we value AIR MILES at 11 to 15 cents each when you redeem them for travel. Of course big sponsors like Safeway/Sobeys probably pay less but even large financial institutions have come back to me jokingly that they wish they could get our valuation of AIR MILES as their purchase price!


There are stories of couples who are planning to retire in a couple of years and have been banking on using their collected miles as a retirement travel fund but stand to lose tens of thousands of miles because of the expiry rule. These are loyal customers and collectors. They are not as AIR MILES states: 

"absentee collectors who've been sitting on their miles for years."

 They are collectors just waiting for the right time and the right opportunity to use their miles.

AIR MILES also mentions

"that international rewards programs might opt out of Ontario due to the province's different regulations."

This may not be the case entirely as the contract signed by you when you join a program would be governed in the state or country that the program runs out of. Most U.S. based programs only have Inactivity rules as well however lots of European and Asian airline programs do have Expiry rules on their miles and points so those could come into question.

If this bill passes but AIR MILES chooses to only exercise the option of keeping miles for Ontario residents we may see a mass migration of people moving from other provinces to Ontario. Online that is. There is nothing stopping members from making their AIR MILES account Ontario based via their online profile on the Air Miles website since most communication is electronic anyways. This is a well known 'hack' in the loyalty industry where people have 'moved' to Australia, Hong Kong etc.  within their loyalty programs just to take advantage of great bonuses, elite status offers or other promotions that are regional based.

Remember to check our Guide to AIR MILES Expiry for articles, tips and more around this hot topic!