In a landmark ruling, the High Court has declared that companies offering customer loyalty programs can no longer impose arbitrary expiry dates on accumulated points, citing such practices as unconstitutional and a violation of consumer rights.
This decision ensures that consumers can redeem their rewards without the threat of sudden policy changes, marking a significant victory for customer advocacy.
The ruling specifically targeted Safaricom’s attempt to impose expiry dates on its Bonga Points loyalty program. In October 2022, the telecommunications giant announced that loyalty points earned before 2019 would expire if not redeemed. Following public backlash, Safaricom reversed the decision but faced legal action challenging the policy’s fairness.
Dr. Magare Gikenyi, a Nakuru-based surgeon and activist, filed the case, arguing that the expiry policy infringed on consumers’ economic rights. He asserted that forcing subscribers to redeem points within a limited timeframe or risk losing them was both unjust and unconstitutional.
High Court Judge Chacha Mwita ruled in favor of Dr. Gikenyi, issuing an order prohibiting Safaricom from implementing the contested policy. “The introduction of expiry dates for Bonga Points of more than three years constitutes a violation of consumers’ economic rights and is therefore unconstitutional and void,” Justice Mwita stated.
The court’s decision reinforces the principle that loyalty program benefits, which are effectively earned through consumer spending, must be protected as an economic right.
As of March 2022, Safaricom’s Bonga Points program represented a liability of KSh 4.5 billion. By March 2023, this figure had decreased to KSh 2.97 billion, reflecting a 34% drop in unredeemed points.
Under accounting practices, loyalty points are treated as liabilities or deferred income and only booked as revenue when redeemed for airtime, SMS, merchandise, or shopping.
The ruling underscores the importance of fair practices in customer loyalty programs and sets a precedent for consumer rights in Kenya. It not only shields customers from losing accrued rewards but also sends a strong message to corporations about respecting the economic entitlements of their users.
For millions of Safaricom subscribers, this judgment ensures the full value of their loyalty points and reaffirms their right to fair treatment in the marketplace.