Loyalty Program Pitfalls: What to Watch Out For in 2025
Introduction
Loyalty programs offer great rewards, but 2025 brings new risks for Canadian consumers. From point devaluations and expirations to rising fraud and a lack of legal recourse, it's more important than ever to stay vigilant. This guide covers the most common pitfalls, 2025 trends, and how to protect yourself and your points.Table of Contents
- Devaluations and Program Changes
- Points Expiration and Account Inactivity
- Fraud and Security Risks
- Legal Issues and Lack of Consumer Protection
- Complexity, Restrictions, and Breakage
- How to Protect Yourself
- FAQ
- Conclusion
1. Devaluations and Program Changes
Loyalty programs can change their terms at any time, often with little warning. Common pitfalls include:- Point devaluations: Needing more points for the same reward, or reduced value per point.
- Tier downgrades: Losing status and benefits if your balance drops or rules change.
- Program terminations: Mergers, closures, or overhauls can wipe out your accumulated rewards.
2. Points Expiration and Account Inactivity
Many programs enforce expiration policies, wiping out your balance if you don't use or earn points within a set period. Inactivity, forgotten accounts, and scattered points can lead to lost value.- Know your program's expiration rules—find them in the terms or your account dashboard.
- Set reminders to use or earn points before they expire.
- Redeem for small rewards or donate points if you're at risk of losing them.
3. Fraud and Security Risks
Loyalty accounts are prime targets for hackers. Attacks are rising, with account takeovers, phishing, and unauthorized redemptions becoming more common.- Use strong, unique passwords for each loyalty account.
- Enable multi-factor authentication if available.
- Monitor your account for suspicious activity.
- Beware of phishing emails and scam websites.
4. Legal Issues and Lack of Consumer Protection
Unlike cash or credit, loyalty points aren't regulated as currency. Providers can change terms, devalue points, or terminate programs with little warning—often leaving consumers with no legal recourse.- Read the terms and conditions before joining or investing heavily in a program.
- Keep records of your points balances and any communications regarding changes.
- Support calls for clearer regulations and consumer protections.
5. Complexity, Restrictions, and Breakage
Many programs have complex rules, blackout dates, minimum thresholds, or hidden fees that make it hard to redeem rewards. Companies profit from "breakage"—points that go unused because redemption is too difficult.- Read the fine print and understand redemption rules.
- Track your points and redemption options using apps or spreadsheets.
- Focus on a few programs to avoid overwhelm and scattered balances.
6. How to Protect Yourself
- Stay active: Use your accounts regularly to avoid expiration or closure.
- Monitor your accounts: Watch for unauthorized activity or sudden changes in your balance.
- Use unique passwords: Protect your loyalty accounts like your bank accounts.
- Redeem often: Don't hoard points—use them before they lose value or disappear.
- Know your rights: Follow regulatory developments and be ready to advocate if you feel wronged.
7. FAQ
Q: Can my points be taken away without warning?A: Yes—most programs reserve the right to change terms or expire points at any time. Stay informed and redeem regularly.
Q: How can I protect my points from fraud?
A: Use strong passwords, enable two-factor authentication, and monitor your accounts.
Q: Are loyalty programs regulated in Canada?
A: Consumer protections are limited—support calls for clearer regulations.