Loyalty glossary · 11. Legal and compliance (15)
Unfair Terms
Unfair terms are loyalty programme contract clauses that create a significant imbalance between the operator and the member, to the member's detriment and contrary to good faith. They are typically buried in long terms and conditions, and they let the operator change the deal without consent.
Unfair terms are drafting tactics, not accidents. The classic is a unilateral variation clause that says the operator may change accrual, expiry, redemption values, or any programme rule at any time without notice. That clause alone makes every other promise conditional, and the operator writes it because it knows almost no member will read the terms before joining.
Work the arithmetic on the most common form. A programme that advertises 1 point per dollar spent and a redemption value of 1 cent per point gives a member who spends 100 dollars a reward worth 100 points, or 1 dollar. An unfair variation clause lets the operator cut the earn rate to 0.5 points per dollar overnight, so the same 100 dollars now earns 50 points, worth 0.5 dollars, a 50 percent cut in value with no change in member behaviour. The member has no remedy because variation was in the small print from day one.
The active member rate is a second hiding place. A clause may define an active member as one who has earned or redeemed points in the previous 12 months, but then another clause says the operator may reclassify any account as inactive after 6 months of no logins, even if the member has earned points in that period. That redefinition rarely benefits the member, and it converts a clear eligibility test into a discretionary one.
Activity-based qualification is treated the same way. A programme may promise elite status based on activity, but the terms define activity as a qualified stay with a minimum spend, and then define a stay as requiring two consecutive nights at the same property. A member who books ten one night stays has clearly been active, but under the written terms has zero qualifying activity. The term wins, and the member loses.
The unfairness is structural. The operator is the only party who drafts the contract, the only party who can vary it, and the only party with the data to know which members are harmed. Most members will never discover the clause until they try to redeem, and by then the programme has already captured their years of spend.
Any loyalty programme that claims to value members should treat a clause that allows it to change the deal materially without the member's express consent as void, not as a drafting choice. Otherwise the accrual promise is not a promise, it is a flag that can be lowered at any time.