The concept of loyalty points – a staple of modern consumer behaviour – is undergoing significant changes that may be fundamentally altering the perceived value of these rewards. Recent updates in policies by major firms like Starbucks and Dunkin’ have brought the issue to the fore. Furthermore, these changes coincide with potential legislative alterations in Ontario, which may legally solidify the ephemeral nature of these points. Yet, the question stands: If money doesn’t expire, why should loyalty points?
A Shift in Loyalty Points Policy
For years, loyalty points have been a tool for businesses to incentivise customer engagement and repeat purchases. However, recent policy changes by Starbucks and Dunkin’ have shown a shift in this traditional approach. In May, Starbucks updated its policy, causing Starbucks Stars to expire six months after the calendar year in which they were earned, making it more challenging for customers to accrue points. Similarly, Dunkin’ rewrote its rewards program rules, causing points to expire 12 months after they’re earned and effectively ending the ability to accumulate points indefinitely.
Impact on Consumer Behaviour and Value
The ability to collect points over time has often motivated consumers, effectively turning shopping into a game where each purchase feels like progress. However, these changes have led to diminishing returns for loyal customers. With higher redemption thresholds and dynamic redemption rates, many customers now face a steep climb to gain any “free” reward. In essence, loyalty programs are becoming less of a reward system and more of a personal inflation machine.
Loyalty Programs as Surveillance Schemes
Modern loyalty programs are not merely incentives for shopping. As a report from the Vanderbilt Policy Accelerator points out, they function as sophisticated surveillance schemes, building long-term behavioural profiles on consumers. Major Canadian programs such as Air Miles, PC Optimum, Scene+, Aeroplan, Triangle Rewards, Petro-Points, and Tims Rewards all create a first-party cross-channel ID. This ID allows the associated company to extract intelligence from our purchasing behaviour, enabling them to selectively offer discounts.
Policy Revisions and Consumer Rights
As consumer purchasing power is significantly impacted by these shifts in loyalty program policies, the need for regulatory measures is becoming increasingly evident. According to a 2023 federal review, Ottawa acknowledged this lack of regulation and suggested that loyalty currency could be defined as a non-cash payment instrument, deserving of protections similar to other payment forms. However, this suggestion has not yet been translated into law, leaving consumers vulnerable to the whims of corporate policy changes.
Looking Towards the Future
As it stands, loyalty points function like a private money supply with minimal rules. Companies can shrink and void value at will, exercising monetary power without accountability. However, a fair economy for loyalty programs must be part of the future of money. Such an economy should be subject to privacy and anti-price-discrimination laws, ensuring that corporations do not exploit consumer loyalty. The implementation of such measures would certainly earn any government major brownie points from consumers, and rightfully so.
