Canada: Ontario And Quebéc Set To Update Legal Requirements On Loyalty Programs

There has been uncertainty in Canada with regards to whether consumer-incentive programs involving loyalty or rewards points fall under the scope of provincial consumer protection laws, given their free nature. Loyalty programs encourage consumers to be loyal to a specific merchant in exchange for the opportunity to obtain goods and services either at a discounted price or for free or for other exclusive offers. In return, merchants that offer these loyalty programs often gain repeat customers and valuable information from consumers' purchasing habits. In many cases, loyalty programs are linked to consumer accounts or contracts which themselves are covered by consumer protection laws. In recent years, Aeroplan and Air Miles announced miles and points older than a certain number of years would expire, but both ultimately opted to abandon their plans in the face of consumer backlash.1 Recently, growing consumer concerns have prompted provinces to enact legislation prohibiting expiry dates on gift cards (prepaid purchase cards). Regulators have now become more interested in consumer rewards programs and have pushed to amend consumer protection laws to cover them.

The recent legislative changes regarding loyalty programs that have been enacted in Ontario and proposed in Québec provide more insight into how loyalty programs will be regulated moving forward.

Ontario

On December 8, 2016, Ontario's Consumer Protection Act2 (the "Ontario CPA") was amended to include in the definition of a "consumer agreement", contracts under which a supplier agrees to provide rewards points to a consumer. In addition, the new amendments prohibit suppliers from entering into or amending a consumer agreement to provide for the expiry of rewards points due to the passage of time alone. As a result, organizations offering rewards or loyalty points to its consumers may no longer require that its customers use their earned rewards points by a specific time.

The amendments are not yet in force and on October 20, 2017, the Ontario government introduced regulations (the "Regulations") supporting the implementation of this new rule prohibiting the expiration of rewards points. When they enter into force, the new amendments to the Ontario CPA will have a retroactive effect to October 1, 2016.

The Regulations specifically exclude stamp or punch card incentives offered by retailers, therefore permitting the expiry of these types of offers. Moreover, the Regulations also provide that the general rules for specific types of consumer contracts such as future performance contracts, internet agreements or remote agreements (distance contracts) will not apply to the portion of a consumer agreement that relates to the provision of rewards points. The Regulations also impose a prescribed value for application of the ban on expiry points — the value of any one of the goods or services, or single set of goods or services that the consumer may receive in exchange for points redeemed must be more than $50. The prohibition on expiry points still applies where the good or service that the consumer receives in exchange for points is a gift card or voucher which can be combined with other gift cards or vouchers to purchase any good or service with a value of more than $50. Practically speaking, this would mean that rewards points would be permitted to expire when the value of any one of the goods or services that the consumer may receive in exchange for these points is not more than $50.

Ontario's new rule against the expiration of rewards points still provides for certain other exceptions. Most notably, upon the termination of the consumer contract (either by the consumer or the supplier) under which rewards points are provided, the consumer's accumulated rewards points mayexpire if this was provided for in the consumer agreement. Moreover, the Ontario CPA does not prevent rewards points from expiring if there is another reason for expiry in addition to the passage of time. The additional reason must be a substantive factor and not simply a disguised means of expiry on the basis of time alone. As an example, the Regulations permit the expiry of rewards points due to account inactivity or if a consumer does not engage in transactions for a certain period of time.

Québec

Québec is set to follow in Ontario's footsteps regarding imposing a ban on the expiry of loyalty points. On February 22, 2017, Bill 791: An Act to Amend the Consumer Protection Act was introduced as a Private Member's bill by a member of Québec's second opposition party. This Bill proposed a prohibition on the expiration of consumer's rewards points. On May 2, 2017, the Québec government itself introduced Bill 134: An Act mainly to modernize rules relating to consumer credit and to regulate debt settlement service contracts, high-cost credit contracts and loyalty programs ("Bill 134"), which included substantially similar wording regarding the prohibition against expiry of rewards points in addition to amendments to other parts of the Québec Consumer Protection Act3 (the "Québec CPA").

Of note is that unlike the Private Member's bill, Bill 134 does not specifically prohibit the change of the value of rewards points. In effect, the new proposed amendments would permit merchants to amend essential elements of a non-fixed-term contract provided that it previously specified, in the contract, the elements that may be amended unilaterally. This provision would give Québec merchants the ability to modify terms of their loyalty program contract with consumers on the condition that they provide the consumers with specific details of the amendment. This rule is aligned with the current general rule in the Québec CPA regarding modifications to consumer contracts.

As in Ontario, the Québec CPA would now explicitly cover contracts involving a loyalty program, which is defined as a program under which consumers may receive goods or services at a reduced price or free of charge through the use of exchange units. As such, a consumer loyalty contract would be subject to the various rules and requirements found in the Québec CPA.

Since being introduced, Bill 134 has undergone its first reading in the Québec National Assembly and given its general support on both sides of government, it is expected to receive assent subject to modifications. There is currently no indication as to when Bill 134 may become law, however, its sponsor has indicated that draft regulations may be ready by February 2018.

Takeaways for Businesses

The soon-to-be harmonization across Ontario and Québec of a prohibition against the expiry of loyalty and rewards points will provide consistency across Canada's two most populous provinces and may inspire other provinces to follow suit.

Merchants in Ontario that offer rewards points programs currently in place or which existed as of October 1, 2016, may not provide for the expiry of their loyalty points. In Québec, as Bill 134 has only recently been proposed, merchants may continue to freely terminate their current loyalty programs or provide for the expiration of consumers' rewards points; however, they must be wary of provoking consumer criticism. Bill 134 in its current form does not include a retroactive effect for its proposed amendments, but merchants should be reviewing their practices to take into account the new changes, which will likely become law. Moreover, it is important to keep in mind that in Québec, loyalty programs are also considered contracts of adhesion and therefore subject to the same stringent rules (e.g. prohibition against abusive clauses).

With the legislative changes in Ontario and proposed in Québec, it is clear that consumer laws will now apply to loyalty programs in these two provinces.

Footnotes

1 See Air Miles backs off from plan to let points expire and Good news: 7-year points expiration scuttled for Aeroplan.

2 2002, S.O. 2002, c. 30.

3 c. P-40.1

About BLG

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Similar Articles
Relevancy Powered by MondaqAI
Borden Ladner Gervais LLP
Borden Ladner Gervais LLP
Global Advertising Lawyers Alliance (GALA)
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Borden Ladner Gervais LLP
Borden Ladner Gervais LLP
Global Advertising Lawyers Alliance (GALA)
Related Articles
 
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions