Companies offering customer loyalty programmes will no longer impose arbitrary expiry dates on the points customers earn, as such a move is unconstitutional.
In a ruling, the High Court has said that such practices undermine consumer rights.
The decision is a significant win for consumers, ensuring that loyalty scheme members can enjoy the full value of their rewards without fear of sudden policy changes.
In the case, the court has quashed a notice issued two years ago by telecoms operator Safaricom introducing the expiry of its Bonga loyalty programme.
Safaricom had introduced the expiry of Bonga points in a notice dated October 28, 2022, which would have seen customers lose points earned before 2019.
The telco, however, reversed the plan after backlash from consumers who faulted the push to limit how long a subscriber could access and redeem the loyalty goodies.
Nakuru-based surgeon and activist Dr Magare Gikenyi challenged the decision, arguing that it was unfair for the telco to force its subscribers to redeem their loyalty points or lose them.
He argued that the effect of introducing an expiry date for Bonga points of more than three years was a violation of consumers’ economic rights and therefore unconstitutional.
High Court judge Chacha Mwita agreed and ruled: “An order of prohibition is issued prohibiting the 1st respondent (Safaricom) from giving effect to the public notice issued on October 28, 2022 purporting to introduce expiry dates of Bonga points of more than three years.”
Such a move, the court said “was a violation of consumer economic rights thus unconstitutional and void.”
The Safaricom programme had accumulated Sh4.5 billion in liabilities by March 2022. The value of unreedeemed loyalty points dropped 34 percent to Sh2.97 billion as at the close of March 2023.
The loyalty points are recognised as a liability or deferred income in Safaricom’s books and are only booked as revenue when redeemed by customers either for airtime, SMS, merchandise or shopping.
In the notice, Safaricom had announced that from January 2023, all Bonga points older than three years would expire and be unavailable for redemption.
The telco launched the loyalty programme in October 2017, offering both prepaid and postpaid subscribers one point for every Sh10 spent on its network.
During the Covid-19 period, Safaricom leveraged the loyalty programme to drive charity causes, including encouraging customers to donate points to the needy under an initiative dubbed Bonga for Good, which saw subscribers donated Sh330 million in the three months to June 2020.
Dr Gikenyi argued that the forced and backdated redemption of Bonga points and the introduction of expiry dates was against the Constitution, particularly on consumer protection.
He submitted that it was against the rules of business loyalty and legitimate expectations of customers as they would be forced to lose their Bonga points, which would essentially mean using extra money to pay for their airtime.
