The Québec Superior Court recently authorized a class action against Shoppers Drug Mart and Pharmaprix (the "Defendants") in connection with the "Pharmaprix Optimum" customer loyalty program.
The program allowed members to earn points through purchases made at participating stores, which could later be exchanged for rebates.
On July 1, 2010, the Defendants unilaterally and without notice changed the terms and conditions of the loyalty program by decreasing the exchange value of points accumulated by members. This also retroactively reduced the value of all points which had been previously earned through the program. Option consommateurs and the class representative, Pierre Guimond (the "Plaintiffs") are demanding that the Defendants maintain the previous exchange rate for all customers who became members of the Optimum program before July 1, 2010, until the expiry of their rights under their membership agreements in 2017. Although the membership agreements contain a clause which specifically allows the Defendants to make unilateral changes without notice, the Plaintiffs argue that such clause is illegal and abusive, and should thus be of no effect.
The court affirmed that the facts alleged by the Plaintiffs disclosed a sufficient cause of action to warrant authorizing the class action. It will now be up to the trial judge to determine whether or not the Defendants' modifications constituted an abuse of rights, and thus whether or not the previous exchange rate must be reinstated.
We strongly encourage companies offering loyalty programs to watch this case closely as the court's finding will likely have an impact on loyalty programs offered in Québec, the wording of program terms and conditions and any changes made to such terms and conditions.
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