CONSUMER PROTECTION ACT WILL AFFECT LOYALTY SCHEMES
Loyalty programmes will have to be overhauled ahead of the Consumer Protection Act (CPA), which will come into force in August next year.
Ina Meiring, a director at Werksman Advisory Services, says key aspects of existing programmes will need to comply with the Act by August next year.
For example, she says, loyalty programmes commonly impose limitations on when, how and what goods and services you can exchange for loyalty credits. Typically, goods or services, such as flights are ‘subject to availability’.
“Under the CPA, companies have a duty to ensure that the goods or services offered to you in loyalty programmes are in stock. Companies will in future be allowed to impose restrictions on availability only if they follow the correct procedure,” Meiring says. This will entail giving you advance written warning that a product or service will not be available for a certain period, and that period may not be longer than 90 days.
Loyalty programmes will also be prevented from imposing any charge for administering, processing or handling a loyalty programme transaction if the consumer is required to pay a periodic fee to remain a member of the programme.