Most small loyalty programmes run with no written terms at all, and most of them are fine until the first dispute: a customer with a year-old card, a reward someone wants as cash, a programme that has to change. Six short clauses prevent nearly all of it.
This page describes what those clauses cover and why. It is not legal advice, and a business trading in several countries should have its terms reviewed by a lawyer in each market, because consumer-protection rules on promotions and vouchers differ considerably.
What must loyalty programme terms include?
Six things, and each should be a sentence rather than a paragraph. A customer will read terms exactly once, at sign-up, on a phone.
| Clause | What it settles | Typical wording |
|---|---|---|
| Earning | What counts as a qualifying purchase | One stamp per transaction, in store, any day |
| Reward | Exactly what the customer gets | A free drink of the customer's usual size, at the tenth stamp |
| Expiry | When unused progress lapses | Progress expires 24 months after the last visit |
| Transfer and cash value | Whether it can be sold, given away or refunded | Not transferable, no cash value |
| Changes and closure | How the programme can end | 30 days' notice; earned rewards honoured |
| Data | Who holds the number and why | Held to operate the card; contactable to withdraw |
A programme with those six covered has no common dispute left unaddressed. Longer terms are not safer; they are simply less likely to be read, and unread terms are weaker in a consumer dispute rather than stronger.
How should expiry be set?
Long enough to survive your own customers' buying cycle, which means at least two years for a seasonal business and at least a year for anyone else. Expiry is the clause most likely to be set thoughtlessly and the one most likely to destroy trust.
| Business | Customer cycle | Sensible expiry |
|---|---|---|
| Café | 2-4 days | 12 months |
| Restaurant | 3-6 weeks | 18 months |
| Salon | 6-10 weeks | 18 to 24 months |
| Garden centre | Annual, seasonal | 24 months minimum |
| Auto repair | 6-12 months | 36 months |
A twelve-month expiry at a garden centre deletes the balance of precisely the customer the programme exists for, the one who buys every spring. Where the cycle is annual, any expiry under two years is a mechanism for punishing normal behaviour.
Some jurisdictions also regulate the expiry of anything resembling a voucher or stored value. That is a question for a lawyer in your market, and it is a good reason to keep a loyalty balance clearly framed as progress towards a reward rather than as credit.
Can you change or end a loyalty programme?
Yes, provided the terms said you could and you honour what customers have already earned. Reserving the right to change the programme is standard and reasonable; applying a change retroactively to accumulated progress is neither.
The rule that protects the business and the customer at once is to change future earning only. If the rate must be reduced, announce it, give notice, and let existing balances redeem under the old terms, which costs a defined amount once rather than an undefined amount of goodwill permanently.
A programme that resets progress teaches customers that progress is not real, and that is the one lesson a loyalty programme cannot survive. It is also the fastest route to a consumer-protection complaint in most European markets.
What do the terms need to say about data?
Who holds the data, what it is used for, how long it is kept, and how to have it deleted. Under the GDPR this information must be given at the point of collection, not buried in a document the customer never opens.
Two separations matter and are commonly missed. Consent to hold a number in order to operate a loyalty card is not consent to send marketing, and a group of several sites must name the entity that controls the data. Loonine's guide to GDPR compliance for loyalty programmes covers both in more detail.
Do the terms have to be signed?
No, but the customer has to be able to see them before joining, and you have to be able to show that they could. A link in the enrolment message and a copy on your website is the normal standard for a small programme.
In practice the enrolment text message is the right place for the link, because it is the one thing every enrolled customer definitely receives. A poster by the till is worth having and proves nothing about any individual.
What causes most loyalty disputes?
Four things, in roughly this order, and all four are clauses that were missing rather than clauses that were wrong.
- Expired progress the customer did not know could expire.
- A reward that turned out to mean the cheapest item rather than their usual one.
- A card refused at a second location.
- A programme that changed or ended without notice.
Each has a one-sentence fix in the terms and a matching sentence in the staff script. The document prevents the argument; the script prevents the disappointment, which is the part the customer remembers.
How long should the whole document be?
For an independent business, roughly one screen. Six clauses, each a sentence or two, in plain language, with a contact address at the end.
The instinct to copy a supermarket's loyalty terms is worth resisting. Those documents are long because those programmes involve tiers, partners, points transfers and stored value; a ten-stamp card at a café has none of that, and the length simply reduces the chance anyone reads the six clauses that matter.
Who owns the card, the business or the customer?
The business owns the programme and the record; the customer owns their own personal data and the right to have it erased. Saying both plainly in one sentence prevents most of the awkward conversations, because the two are routinely confused in both directions.
The practical consequence worth stating is that deleting the card from a phone is not the same as leaving the programme. A customer who wants to be forgotten has to ask, and the terms should say where to ask, which is also what the GDPR requires of you.
What happens to a reward if the business closes or is sold?
Say what happens, because saying nothing is the version that produces complaints. The reasonable standard is a notice period during which earned rewards can still be claimed, and that same clause covers a sale, a change of ownership and a closure.
In a sale the loyalty list is part of what changes hands, and that is a data protection matter as well as a commercial one. Customers were told who held their data; if that changes, they are entitled to be told, and a line in the terms anticipating it makes the transfer straightforward rather than a fresh consent exercise.
Can you refuse a reward?
Only on a ground the terms already stated, and abuse is the only one worth writing down. A reward withheld for a reason the customer could not have known about reads as a trick, whatever the underlying justification.
Keep the abuse clause narrow and factual: stamps obtained without a purchase, one person holding several cards, rather than reserving a general right to refuse at your discretion. A broad discretionary clause is both less likely to be enforceable in a consumer dispute and more likely to be the thing a customer quotes back at you.