US Loyalty Currency Expiry and Dormancy Laws


To gain an understanding of the current loyalty currency expiry and dormancy laws in USA by learning what the current loyalty currency expiry and dormancy laws in USA are, and if they differ by state and what the current laws for expiry of loyalty gift certificates purchased using loyalty currency are. Also, by indentifying some examples of practices/policies that at least 5 major retailers in the US that have loyalty programs have used for loyalty expiry or account dormancy, and by finding some recent news articles or press releases in the US related to the expiry of loyalty points and/or gift cards.

Early Findings

Regulations - Dormancy and Unclaimed Property Laws

  • Loyalty programs, particularly complex programs, have the potential to be subject to a multitude of regulatory and legal requirements.
  • Unclaimed property laws in some states may "escheat" abandoned rewards programs if they exceed a specified dormancy period. One such example was the case of "State of Delaware ex. rel. William Sean French v., Inc. (C.A. No. N13C-06-289 Del. Sup. Ct. 2018). found guilty in reverse False Claims Act case for concealing ~$3 million from escheat."
  • Not all states do so, Arizona is an example where "merchandise points" are exempt from escheat under Ariz. Rev. Stat § 44-301(15). As at 2015, the following states excluded loyalty, promotional or charitable rewards from escheat: AZ, AR, CA, FL, GA, HI, IL, LA, MD, MA, MT, NV, NH, NJ, NM, ND, OH, OK, RI, TN, TX, VT, WA.
  • The 2016 Uniform Unclaimed Property Act defines a loyalty card or program as not having direct monetary value, such as rewards, incentives, rebates or other benefits. However, states can still take a different approach in applying the Act. Ohio is looking at a broad exemption from escheat for loyalty cards/programs, while New Jersey would require escheat if the program provided any consideration or benefit to the issuer.
  • As most states exempt loyalty programs from escheatment, it would appear that expiration dates or how to treat breakage (unredeemed or dormant rewards) is something that a company can establish as long as the terms and conditions are clearly laid out.
  • It would be prudent to note that being less than transparent with terms and conditions could result in lawsuits.

Financial Reporting Obligations

  • IFRS 15 Revenue from Contracts with Customers has replaced IFRIC 13 Customer Loyalty Programmes for financial reporting purposes.
  • Deloitte has provided a comprehensive roadmap to help businesses understand and apply the new revenue rulings. This includes understanding customer loyalty programs, their accumulation features, reporting requirements and a consumer's material right to redeem under the program or how to treat it if that material right expires.


  • Terms and conditions around dormancing vary among major retailers. Victoria's Secret requires customers to spend a minimum amount in a rolling 12 month period or their rewards will reset. Sephora's points expire after a 12 month period of dormancy.


  • Loyalty programs and issues around the expiration of points is often reported on in the media. For example, Forbes recently discussed airline rewards programs while CNBC had a report on Starbucks and their revamped loyalty program.

Summary of Findings Relevant to Goals

We were able to determine that the regulations surrounding loyalty programs will vary depending on the complexity of the program. At its most simple, expiration and dormancy appears to be something that a retailer can determine themselves as long as the program does not provide consideration or benefit to the retailer as a gift card would do. It also appears that many states exempt loyalty programs from escheation under the 2016 Uniform Unclaimed Property Act. There are financial reporting obligations under the IFRS 15 Revenue from Contracts with Customers regulation. We propose continued research to provide a greater level of detail for the above as well as capturing the remaining information requested.

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