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Two categories of points
Air Miles quietly launched a new category in 2012 for those who wanted immediate discounts on purchases at participating retailers.
Many collectors didn’t know they had to sign up to earn these types of rewards; only as they scrambled to use points before the Dec. 31 redemption deadline did they learn that discount coupons were not available to them.
“If you decide to redeem your Air Miles for an item of merchandise and you are short of the number of miles needed in your dream account, you can’t supplement the needed quantity from the miles accumulated in your cash account. Or vice versa.”
Fewer than six in 10 reward miles earned by collectors have ever been redeemed, according to LoyaltyOne’s financial statements. That difference, called “breakage,” makes up a good portion of the company’s profits.
LoyaltyOne told investors it expected nearly all of the cash rewards would be redeemed within 12 months — compared to 42 months for dream rewards. That meant it couldn’t rely on breakage to make money.
Customer service issues
During the lead-up to the abandoned rule changes, I received hundreds of complaints from Air Miles collectors. Almost all cited long waits to reach customer service. One person said she spent seven hours on hold with the call centre and still didn’t get through to an agent.
Only when I forwarded readers’ emails to Air Miles did some collectors finally get a call back and help using their points for rewards. Those Air Miles users were furious to find that media intervention was required.
“I’ve called Air Miles many times and faced nothing but long waits,” said collector Ann Misetich. “I called Dec. 8 at 5:49 p.m. and was still on hold at 7:19 p.m., while hearing a recording that my wait time was expected to be 16 to 24 minutes.”
The two-year rule
While Air Miles can no longer expire, you can still lose them all if you don’t collect new points or redeem existing points over a two-year period.
Air Miles originally didn’t enforce the activity rule in its terms and conditions. But the formerly lenient attitude has changed.
“When I called to explain, a wall of zero tolerance was placed before me. It made little difference that I was an Onyx collector (the highest level) or that my wife and I have been zealous collectors since the program started close to 25 years ago.”
Watch out for extra fees on airline flights. Consumers pay higher surcharges for Air Miles flights than for the same flights bought directly from the airline, according to a media report. Air Miles won’t let you use your points to pay extra fees, but other loyalty plans allow it.
Read reviews of customer service. It’s no use to collect reward points if you can’t redeem them easily. Loyalty plans make money from points collected and not redeemed. Look for companies whose service is above average in online reviews.
Ellen Roseman’s appears each week in Smart Money.