Gift cards and loyalty points in Ontario: expiry, fees and what a restaurant may promise

Gift cards are good business for a restaurant: cash up front, a guest who will usually spend more than the card, and a breakage rate you should not count on. They are also one of the easiest places to break a consumer rule by accident, usually with a line of small print copied from a template. Ontario's government sets the rules, and a few minutes with them now saves a dispute later.

Can an Ontario gift card expire?

Not in most cases. The Consumer Protection Act bans most retail business gift cards from having an expiry date, and a card can be used to its full value no matter when the holder decides to use it. The government names two exceptions: a card for one specific service, such as a spa massage, and a card issued for a charitable purpose.

For a restaurant, a card sold for a dollar value is a gift card. A card for one specific thing, such as a named tasting menu, is closer to the specific-service exception, but think carefully before you use it, because a card that reads like a dollar value usually is one.

What fees can you charge?

Most businesses cannot charge activation, service or dormancy fees on a gift card. You may charge for customizing a card or replacing a lost or stolen one. Shopping mall cards follow their own rules, with an activation fee of up to 1.50 dollars and, after 15 months, a monthly fee of up to 2.50 dollars. A single restaurant is not a mall, so assume none of that is open to you.

What must the card say?

Restrictions and conditions have to be shown in clear and visible writing for the customer. If your card only works for dine-in, excludes alcohol or cannot be used with another offer, print it on the card or on the receipt that goes with it.

What about a bonus card?

A common offer is to give a 20 dollar bonus card to anyone who buys 100 dollars of cards in December. The government's gift card page does not mention promotional or bonus cards by name, so do not assume the bonus can carry an expiry date. The safest approach is to treat it as a gift card with no expiry, or to ask the Ministry or a lawyer before you print a date on it.

What happens if your business closes?

The terms may allow use at another location. The government suggests that a holder of a card from a retailer in financial difficulty contacts the trustee in bankruptcy. Do not sell cards when you know you are about to close.

Are loyalty cards covered?

Loyalty and club cards are excluded from the gift card rules, and they have their own rule for points. Since 1 January 2018, reward points generally cannot expire just because time has passed since they were earned. The exceptions the government lists are:

• accounts closed after a long period of inactivity, if the membership agreement says so
• vouchers, which are treated as gift cards
• points that cannot be redeemed for any single item over 50 dollars

If your program turns points into a voucher, that voucher is a gift card in the eyes of the rule, and it cannot expire.

What if a customer was charged a fee they should not have paid?

Ontario's advice to cardholders is to ask the business that issued the card for a refund, and to file a complaint if they are not reimbursed. For an illegal fee on a shopping mall card, Ontario says the mall must refund within 15 days. Do not wait for the complaint. If your terms ever carried an inactivity fee or an expiry line, correct the wording and tell anyone who bought a card under the old terms that they can use it in full. That costs you little, and it is far cheaper than a dispute.

How should you word the card?

Say what the card is worth and where it works, in plain words: the dollar value, the fact that it can be used in full whenever the holder chooses, and any real limits such as dine-in only. Leave out "valid for 12 months" and "dormancy" language even if your template includes it. If you sell cards through a third-party platform, read its default terms, because the rule applies to you as the business that gives the card its value.

What should you do now?

1. Look at every card, voucher and certificate you sell, online and at the counter.
2. Remove expiry dates from dollar-value cards, and remove any fee wording.
3. Print the conditions where the customer can see them.
4. Check that your point-of-sale system does not charge an inactivity fee.
5. Read the tax side in gift card sales and GST/HST for restaurants.

The statute behind the government's page has been replaced by a newer Act in the statute book, so check the current citation on e-Laws before you quote a section number in your terms. For other consumer-facing rules, see cancellation and no-show policy wording and pricing and fee rules for menus.

More in the Canadian guides for food businesses.