Reward programs are found in many Canadian franchise businesses, from restaurants to retailers and service providers. These programs entice customers to return and buy more while helping to increase a brand’s visibility. However, there are significant changes coming that will affect rewards programs offered by franchises and other businesses in Ontario, as reported by Mondaq:
(http://www.mondaq.com/canada/x/556076/Dodd-Frank+Wall+Street+Reform+Consumer+Protection+Act/Ontario+Enacts+Ban+on+the+Expiry+of+Rewards+Points).
In the beginning of December, a bill known as the “Protecting Rewards Points Act” received Royal Assent in Ontario. This bill will amend the province’s 2002 Consumer Protection Act (CPA). Both the stated purpose and primary impact of this bill revolve around the banning of the expiration of rewards in consumer agreements because of a passage of time. If a consumer agreement has a provision that contradicts this, it will be made void, and this effect is retroactive to the first of October of 2016. This means any reward points that expire after the first of October of 2016 must be reinstated. The final regulations have yet to be issued regarding this bill, but as it stands, a rewards program can still be terminated and accumulated awards can then expire as long as the consumer agreement provides for it.
With the definition of consumer agreements being broadened underneath the CPA to include those regarding reward points, there may also be other implications for reward programs entered into after the Points Act comes into force. The conditions and terms of future rewards programs may also be impacted because the Act may have reach beyond the expiration of rewards points. Other potential regulations involve the transfer of a consumer’s reward points, including in the event of death; termination of reward programs; and the inactivity of points accrued under a reward program. Since the CPA was not designed with reward programs in mind, the move may have additional unforeseen consequences.
Regulations will be issued once the Act is in force, and consultations regarding those new rules are expected to take place this year.
With the national scope of reward programs across many franchises in Canada, this new act could be disruptive to franchises with rewards programs in Ontario. Prospective franchisees who are considering this province and franchisors alike need to stay on top of these changes as they develop to ensure the franchise rewards program is following the new rules and any other regulations that may arise in the future.
