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Bryan Pearson, CEO of LoyaltyOne, the company that runs Air Miles, says the firm has been slow to respond to criticism, but defends the decision to impose expiry dates as a marketing strategy.JENNIFER ROBERTS/The Globe and Mail

Executives from one of Canada's largest loyalty program companies went to Queen's Park on Tuesday to state their objection to a bill that would deny them the right to have points in their programs expire in Ontario.

Todd March, senior vice-president and chief financial officer of Air Miles parent company LoyaltyOne Inc. went before the standing committee on regulations and private bills to say that he and his company "strongly oppose" Bill 47, which seeks to amend Ontario's Consumer Protection Act to prevent the expiry of loyalty points.

Vice-president of corporate affairs Mitchell Merowitz told the committee that no other jurisdiction subjects the company to such regulations.

The bill, put forward last month by MPP Arthur Potts (Beaches-East York), proposes that "a consumer agreement under which rewards points are provided shall not allow for the expiry of rewards points." Further changes to the bill approved on Tuesday specify that expiry will not be allowed "due to the passage of time alone." That means companies would not be able to do what is known in the industry as "date stamping" – setting a length of time after which points expire.

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The bill also proposes that companies restore any rewards points that expired after Oct. 1 this year. And under the amendment, they would receive no compensation for having to return those points.

Mr. Potts pushed for changes to the legislation after seeing the backlash from some consumers to LoyaltyOne's decision to date stamp its program's miles. Air Miles first announced in 2011 that, beginning Jan. 1, 2017, miles five years or older would expire.

"I was hearing about it all over my community. My family was talking to me about it," Mr. Potts said in an interview Tuesday.

He compared the proposed rules to the 2007 regulation banning expiration dates for gift cards in Ontario.

In his presentation, Mr. March said the effects of the legislation "would be immediate and severe."

In an interview Tuesday, LoyaltyOne chief executive officer Bryan Pearson suggested the legislation would have a negative impact on a number of businesses operating rewards programs, adding to their costs by forcing them to operate in a different regulatory environment in Ontario. He also suggested that those companies, including airlines and coffee chains, might choose not to offer rewards to consumers in Ontario.

"It creates uncertainty … because at any point the rules can change," Mr. Pearson said. "If there's one thing companies need to create value, it's a level of consistency and a clear understanding of what the playing field will be for industry."

Aeroplan announced in 2007 that it would date stamp its miles so that unused miles would automatically expire after seven years, but in 2013 it abandoned that policy after negative consumer feedback. However, the program does mandate that its miles expire if members are inactive for more than a year; to remain active they must earn miles with a purchase at least once a year, redeem miles or donate some to charity.

Vince Timpano, president of Aeroplan parent company Aimia Inc., also went before the committee on Tuesday to urge that the legislation not affect such policies.

"Our policy is fundamental to the health of our business. It requires members to stay engaged in the program," Mr. Timpano said.

"We recognize there may be reasons to have points expire," Mr. Potts said in an interview. Reasonable conditions for expiry, he suggested, would be the inability to contact a member to confirm that they want to maintain membership or if the member signs off on an expiration in exchange for a gift card.

The bill will now proceed to its third reading and will be subject to a vote.

Loyalty programs give away points for free because there is great value in tracking people's shopping habits. Not only do points offer an incentive to spend money in a particular place, but retailers can use that information to know how best to stock their shelves to appeal to their most loyal customers. And any partner in a loyalty program can use the information to know which marketing offers are most likely to get a customer's attention. Those partners pay companies such as LoyaltyOne so they don't have to shoulder the cost of operating their own programs.

When those programs offer rewards, they negotiate lower prices and make money on the difference between what their partners pay for the right to give out points and what the program pays for the rewards those points can buy.

Points that lie dormant, therefore, are pure profit if they're never used. But they are also a liability because they could be used at any time. That's why there's a financial upside to having them expire.

Some customers have objected to such changes because they spend years accumulating points toward a big purchase such as a vacation and don't want to see those rewards vanish. Lighter users of a program may depend on a longer shelf life because it can take time to accumulate points.

Michael Judd, a long-time Air Miles collector, also went before the committee on Tuesday to say he felt he had earned those miles – and to object to the difficulty he had with the company's customer service while preparing for the upcoming expiration date.

"I spent an awful lot of money with their business partners. … It's a problem," Mr. Judd said. "It honestly feels like I'm being robbed."

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