The Supreme Court of British Columbia has struck down a set of bylaws that prohibited customers of pharmacies from earning loyalty rewards points on prescriptions. The decision comes as industry clarifies the rules for rewards programs.
The case dates back to December 2013 when the College of Pharmacists of British Columbia passed a bylaw that stopped customers from collecting points at stores in the province. A legal challenge was filed by grocery chain Sobeys, with consumer groups joining later.
“I find that the Impugned Bylaws are overbroad and that their net effect is harmful to the public interest in obtaining pharmacy services and prescriptions at the lowest price. The Impugned Bylaws are therefore unreasonable,” Chief Justice Christopher Hinkson wrote in his decision.
“We have always taken the position that this appeal would happen and now it has,” said Bruce Cran, president of the Consumers’ Association of Canada. “We never did understand why the College of Pharmacists would involve themselves.”
Sobeys has said it will keep its Club Sobey’s card until the fall, when it will be replaced with Air Miles. According to a spokesperson, the company is not currently involved in other similar cases.
Meanwhile, the College of Pharmacists said in a statement that it “has not made any decisions regarding possible next steps.”
“This case will have bearing,” predicts Cran. “I hope it is a lesson to people in general to consult with consumers. We could do without this whole episode—we would all be better off if this never occurred.”
The B.C. case isn’t the first time the issue of restrictions on loyalty points has been raised in Canada. In June, the Alberta College of Pharmacists also tried to restrict pharmacy points. But a ruling the Alberta Court of Queen’s Bench found that Alberta consumers would be able to continue to use rewards until early next year.
“Maintaining the status quo avoids any potential disruptive effects to pharmacies and the public in the event that the Inducement Prohibitions are ultimately struck down and members of the public have changed to another pharmacy,” wrote Justice J.J. Gill in the case.
Ontario’s pharmacies may also face a similar challenge.
“We did try to engage the College of Pharmacists in every one of those provinces at different times,” notes Cran. “We were always rebuffed.”
A Public Interest Advocacy Centre report published in 2013 on issues related to loyalty programs concluded that “the marketplace regarding redemption and expiry of loyalty currency is imbalanced in favour of loyalty program providers.
“While the existing market still provides value to consumers in this exchange, the power to change the terms and conditions unilaterally that currently rests with loyalty program providers does not inspire confidence going forward.”
The advocacy group made several recommendations, among them that industry-wide guidelines be introduced for the transfer of loyalty points and for informing consumers of changes to terms and conditions, as well as creating complaint bodies for consumers to resolve issues.
Kaven Baker-Voakes is a freelance reporter based in Ottawa.