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Air Miles is a Canadian loyalty reward program that allows consumers to collect points when they do business with certain retailers, financial institutions and credit/charge card issuers. The points can be used for travel rewards, redeemed for consumer goods or converted for use as cash. (Ricky Leong photo illustration)

What happens when a loyalty reward program is disloyal to its users?

This question is on the minds of millions of Canadians after it was revealed Thursday afternoon Air Miles was rescinding a policy, which would have come into effect on Dec. 31, 2016, causing unused points to expire if they weren’t used within five years of being collected. As an added headache, all points accrued before Dec. 31, 2011, would have been subject to mass expiration were they not expended by the deadline.

The change was trumpeted as good news, allowing Air Miles collectors to be “confident that their balances will be protected,” president and CEO of LoyaltyOne Bryan Pearson said in a press release. He said the move was precipitated by pending provincial legislation in some parts of Canada that would have made expiration of loyalty reward points illegal. Indeed, legislators in Ontario are soon to vote on a such a law.

There is one big hitch, however: With LoyaltyOne waiting until the last possible moment to change its mind on the Air Miles point expiry policy, many of their members had already cashed in part or all of their balances in anticipation of the Dec. 31 deadline.

The company is currently being bombarded with Twitter messages from exasperated members who want to return frivolous redemptions made before the policy reversal. In turn, Air Miles is supplying the same terse reply to all those requests: “We are not accepting returns, cancellations, or exchanges due to the cancellation of the expiry policy, once booked.”

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Air Miles Twitter exchange. (Image from screen capture)

Before that, with the now-defunct point expiration deadline looming, LoyaltyOne was having all kinds of trouble keeping up with the demand from its members for reward redemptions. Its customer care centre was insufficiently staffed to respond to the influx of phone calls and its website often went down due to system outages. It reached the point where a class action lawsuit was filed against the reward program in Alberta Court of Queen’s Bench just a few months ago.
There are some 11 million active Air Miles accounts in two-thirds of Canadian households, according to LoyaltyOne. With this kind of market penetration, there was no doubt the point expiry policy and subsequent about-face would have a massive impact.

LoyaltyOne now must deal with the wrath of angry consumers, having been taken for a ride twice — first with the Air Miles point expiry was announced and a second time when they changed their mind. It also has the difficult task of winning back the trust of a good portion of those 11 million account holders and its many retail partners who’ve felt slighted through the entire affair.

It’s now plain to see what a public relations disaster this has been.