Issue #2: Is Your Fine Print Causing Big Program Friction?

Loyalty programs too often play follow-the-leader — rushing to copycat the benefits of an industry giant, then just as quickly copying when that giant cuts back or adds restrictions. The problem? That second move hurts the entire industry and fuels consumer skepticism about rewards.

And the data backs it up:

What many brands don’t realize is that the source of this frustration is often buried in the T&Cs. I call them the fine print flaws of loyalty. Members don’t notice them until they crash into them — and by then, the annoyance chips away at trust and long-term value.

(To be clear: I’m not talking about rules to mitigate fraud or gaming. Or the fine print your legal team writes that keeps you away from a deposition. Keep all those in place. I’m talking about the “because-we-can” rules that backfire.)

1. Automatic Point Expiration (regardless of member activity)

Why it’s bad: You’ve turned the most positive part of your program — redemption — into a race against the clock. Active customers feel punished when they’re forced to burn points before they’re ready, or worse, lose them entirely. It’s well proven that redeemers are some of your best customers. But forcing point burn does the opposite. Instead, entice point burning with reminders of what they’re worth or point discount promos.

✅ Who does it right: Most travel brands such as Hyatt, United and more. As long as you have some activity (usually once every 12–18 months), your points stay alive.

2. Inability for Rewards to Stack With Other Promotions

Why it’s bad: You’re penalizing members for your marketing calendar. And you’re creating unnecessary friction at checkout when they try to use both a promo code and their rewards. Congrats — your best customers are now greatly annoyed with your program.

✅ Who does it right: Ulta Beauty. Members can stack point multipliers, discounts, and rewards in the same transaction. No wonder more than 95% their sales come from loyalty members (and that’s not a typo!).

3. Limiting Reward Usage

Why it’s bad: Your members did their part in earning the reward, and want flexibility in how they are used. So in the words of Mel Robbins… “Let Them”! Fine print rules like “only 1 Reward per transaction”, “minimum $XX purchase required” or “Rewards can’t be used on..(insert long list of products and brands)” is limiting the most joyous part of your program. You want customers to use as many Rewards as possible.

✅ Who does it right: Chick-fil-A One. Members can stack as many rewards as they want in a single order, use them for literally anything on the menu, and adding to their feel-good-chicken-richness—points don’t expire automatically either.

4. Limiting Earning Channels (yes, I know this is controversial)

Why it’s bad: The walled-garden approach to loyalty started with travel programs who didn’t want to reward bookings via OTA’s like Expedia. Then it extended to many clothing brands who wanted to drive sales via their own website, and not their retail distribution partners . But when you only reward purchases in your owned channels, you’re not rewarding loyalty for choosing your products — just to a channel. That misses the real goal of your program: brand preference to drive incremental revenue. Sure, weight your benefits toward owned channels as the margins are better, but design cross-distribution partnerships to expand your programs reach.

✅ Who does it right: e.l.f. allows members to scan receipts and earn points from any channel, such as product bought at CVS. LEGO rewards for product regardless of where it’s bought and even lets customers earn points on old sets sitting in their closets! Generous and genius.

5. Impossible-to-Cancel Subscriptions

Why it’s bad: Subscriptions are lucrative, but trickier to navigate. Laws are tightening here in the US, and besides, forcing members to stay in your program can cloud your view of program health. Do they actually value the membership — or are they just stuck in it? Build a save strategy instead of a trap door.

✅ Who does it right: DoorDash’s DashPass can be paused or cancelled anytime. Costco, BJ’s Wholesale, and Sam’s Club all allow cancellation with a money-back guarantee. All 4 are doing just fine in membership revenue.

Others Flaws Worth Mentioning:

On the flip side, if your program does not have some or all of these fine-print flaws, you need to promote that as a benefit. “No Point Expiration”, “Cancel Anytime”, “Redeem as many as you like” etc are all hugely valuable headlines that can differentiate your program from your competitor. Positioning is very important.

Finally, I know that many of these flaws often stem from tech limitations or legacy systems. But put the fixes on your roadmap. The performance benefits you earn from removing friction often outweighs the cost.