New York Protects Consumers from Expiration or Cancellation of Loyalty Points

New law takes effect just prior to the holidays

On December 10, 2023, a new law takes effect in New York that will mandate a grace period that will allow consumers three months to use up their credit card rewards points prior to a change in their loyalty program. New York General Business Law § 520-e was enacted in 2021 with a delayed effective date. The new law provides that before a credit card rewards program can be modified, cancelled or terminated, the consumer must be provided with at least 90 days’ notice of the forthcoming change and therefore an equally long window of opportunity to “redeem, exchange, or otherwise use” the previously accumulated points. The notice must go out no later than 45 days after the change has been decided upon by the credit card issuer.

The law also makes it illegal for credit card issuers to avoid this consumer protection by placing a waiver in its terms of use or any other separate agreement, including situations where the reward programs are governed by a separate set of rules.

For New York residents, the statute will override most credit card loyalty program agreements to the extent such agreements include a provision that consumers have no ownership rights in their reward points or that the rewards program can be modified or terminated, or points can expire, at any time without notice.

While the new law does not specify any definite remedy for cardholders or penalty to be assessed against card issuers for violating the law, New York’s General Business Law does provide consumers with a private right of action.

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