Bah Humbug – Are Changes In Store For Loyalty Reward Collectors In Ontario?

In June 2025, the Ontario government introduced the Protect Ontario by Cutting Red Tape Act (Bill 46) with the goal of making Ontario the most competitive place in the G7 to invest, create jobs, and do business. The omnibus Bill 46 proposes to amend a slew of provincial laws to "protect Ontario by cutting red tape to save people and businesses time and money and to support better services and a stronger economy." Caught up in this omnibus Bill 46 are proposed amendments to the Ontario Consumer Protection Act, 2002 (CPA) intended to refresh the rules and procedures regarding the expiration of loyalty reward points.

As we enter into the holiday season in challenging economic times, many will be looking to redeem loyalty reward points to help stretch a dollar.

A Bit of a Backstory

The issuance and collection of loyalty rewards points has been one of those marketing success stories of the late 1980's. Goods and service suppliers reward their loyal customers with the ability to collect reward points based upon the dollar value of purchases made by those customers. Those loyal customers may then exchange their reward points for a myriad of goods and services. These loyalty programs have exploded in number and are offered by merchant or service providers as an internally administered loyalty program, or they may be outsourced to third party loyalty program purveyors. However, every success story has at least one thorny issue. In the case of loyalty reward programs, that thorny issue is that the more successful the loyalty program (i.e., the more rewards points issued), the greater the balance sheet contingent liability of the reward point issuer for the amounts owed to their loyal collectors. In consequence, loyalty reward point purveyors decided to amend their loyalty reward collector agreements to insert what have become known as "sunset clauses." In essence, a sunset clause allows the issuer of loyalty reward points to claw back or terminate the loyalty reward points upon the happening of some defined event – most often the passage of a set period of time after issuance on the theory that you either "use em or lose em." You can imagine the challenge faced by loyalty reward issuers when wording notices to their loyalty customers of the introduction of sunset provisions. Most issuers chose to encourage their loyal customers to redeem their banked loyalty reward points for goods and services before the sunset provisions came into effect thereby forcing consumers to purchase goods and services via redemption of loyalty reward points that the consumers might not have immediately acquired in the normal course.

In response to public outcry, the Ontario provincial government amended the CPA in December, 2016 to introduce Section 47.1 of the CPA with effect from October, 2016, to prohibit the expiry of loyalty reward points based solely on the passage of time (Time Prohibition). The Time Prohibition though was subject to a number of regulatory exemptions under Ontario Regulation 388/157 (Regulation). Two of the most familiar exemptions are the potential contractual expiry of loyalty reward points after a period of earning inactivity, and if the goods or services that the consumer my acquire by way of redemption of loyalty reward points have a value of less than $50.00.

What's Changing?

Bill 46 proposes to remove the Time Prohibition from the CPA and authorize the Ontario provincial Cabinet to set loyalty reward point expiry rules through regulation rather than by amendments to the CPA. The motivation here is that the provincial Cabinet will be more nimble in addressing the commercial realities of sunset clauses by way of regulation than through the usual process of change via the introduction, several legislative readings, review and consultation, of provincial legislation.

In addition, Bill 46 proposes to introduce new obligations on businesses to be transparent with consumers. Businesses will be obligated to provide a consumer with clear notice if loyalty rewards points expire, or are cancelled or are suspended. The consumer will have the right to make written request to the issuer for reinstatement of those loyalty reward points. If that request is denied, the issuer of the disputed loyalty rewards points must provide the consumer with a responding written notice explaining the reasons for the denial. Importantly, consumers will have the ability to commence a legal action against the issuer of loyalty rewards points to recover improperly suspended, canceled or expired reward points.

While the Ontario government frames these changes as strengthening consumer rights and reducing governmental red tape, critics argue that removing the Time Prohibition from the CPA may weaken consumers' rights and create uncertainty for consumers.

Key Actions for Businesses

These proposed changes, if passed, will affect any company offering programs in Ontario under which consumers may earn loyalty reward points. Although anticipated regulations may allow loyalty rewards points to expire after the passage of a period of time, companies may have to implement fulsome procedures to receive, track and respond to consumer inquiries and reinstatement requests.

Bill 46 is working its way through readings in the Ontario provincial legislature. Once enacted as legislation, the devil will be in the details – the development and promulgation of appropriate regulations under the authority so delegated to the provincial Cabinet.

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.