Aeroplan has released updated terms and conditions for its loyalty program which are effective December 19, 2022, for current members and effective immediately for new members as of October 19, 2022. What is particularly interesting about the updated Aeroplan terms and conditions is that they expressly address the issue of credit card churning.
First off, what is credit card churning? It is the practice of applying for a credit card with the primary purpose of collecting a lucrative welcome bonus, then cancelling that credit card usually within the first year so that you do not have to pay another annual fee and then, some time later, applying for the card again to collect another lucrative welcome bonus, then cancelling again, etc. Rinse and repeat.
There is no doubt that, to a greater or lesser extent, applying for credit cards to receive welcome bonuses is a fairly key strategy in the travel hacking game. Some apply for one card a year, others a few credit cards per year and on the extreme end there are those who churn through 10+ cards every year in order to receive welcome bonuses. Some play it safe and try not to seek repeat welcome bonuses from the same card. Others churn the same card repeatedly where it is know that the credit card issuer doesn't prevent it. Let's take a look at a couple of the updated terms and conditions and see what attempts Aeroplan is now making to discourage such activity.
10. Welcome Bonus Provisions
From time to time, Aeroplan and the financial institutions that issue Aeroplan co-brand credit cards (an “Aeroplan Credit Card”), together with their respective affiliates and business partners, may offer an incentive or bonus of Aeroplan Points (a “Welcome Bonus”) to incentivize a Member to become a holder of an Aeroplan Credit Card or acquire products or services (“Products and Services”) offered from time to time as part of the Aeroplan Program by such parties.
In connection with a Welcome Bonus being made available for becoming a holder of an Aeroplan Credit Card, such Welcome Bonus is intended as an incentive for a Member to become a holder of an Aeroplan Credit Card where that Member is not then a holder of the specific type of Aeroplan Credit Card for which the Welcome Bonus is being offered. Similarly, in connection with bonus or incentive Aeroplan Points being offered as an incentive related to Products and Services, such bonus Aeroplan Points incentives are intended for a Member who has not previously received bonus Aeroplan Points for the same Products or Services, to acquire such Products or Services.
Aeroplan may, in its sole discretion, choose to limit the number of Welcome Bonuses or similar bonuses or incentives a Member may receive in any period, and, in addition to the other remedies set forth in these Terms and Conditions, reserves the right to suspend, revoke or terminate the Account of any person who engages in a behaviour of excessive use of the Welcome Bonus offers. Such behaviours include but are not limited to: (i) applying for multiple Aeroplan Credit Cards across one or more product types or across one or more financial institutions that issue an Aeroplan Credit Card; (ii) a pattern of cancelling, or disengaging in, an Aeroplan Credit Card shortly after receiving a Welcome Bonus or similar bonus or incentive; and (iii) a pattern of purchasing and then cancelling or returning any product or service for which Aeroplan Points were issued.
11. Prohibited activity
Aeroplan Membership is a privilege that can be suspended, revoked, or terminated at any time, for any reason, and without compensation. Reasons for suspension, revocation or termination include, but are not limited to: (i) a circumstance where a Member intentionally engages in a pattern of activity or behavior that, in the reasonable opinion of Aeroplan, is intended to circumvent or work around these Terms and Conditions, or the terms and conditions of any Aeroplan partner; (ii) any abuse by a Member of any of these Terms and Conditions, any additional applicable terms and conditions or any benefit, privilege or reward associated with the Aeroplan Program; (iii) any misrepresentation by a Member to Aeroplan, its affiliates, participating partners or suppliers or to any entity associated with or participating in the Aeroplan Program; and (iv) any other actions or conduct of a Member deemed by Aeroplan, in its sole discretion, to be damaging to Aeroplan, the Aeroplan Program or the interests of Aeroplan’s affiliates, participating partners or suppliers, including, but not limited to: (i) applying for multiple credit cards across different product types (e.g., Entry, Core, Premium), across multiple financial institutions that issue an Aeroplan Credit Card in order to circumnavigate these Terms and Conditions or the terms and conditions of any such financial institution issuing an Aeroplan Credit Card thereby receiving multiple Welcome Bonuses; and (ii) a behaviour of cancelling, or disengaging in, an Aeroplan Credit Card shortly after receiving a Welcome Bonus.
Where, in the reasonable opinion of Aeroplan, a Member has violated these Terms and Conditions, Aeroplan may, at any time and in its sole discretion, take one or more of the following actions: (i) freeze the Account of any Member while Aeroplan investigates suspected activity on the part of that Member; and (ii) refuse to credit the Account of any Member, or debit the Account of any Member.
In the event a Member’s participation in the Aeroplan Program is terminated by Aeroplan in accordance with these Terms and Conditions, all accumulated Aeroplan Points will immediately be forfeited.
Aeroplan reserves the right to restrict or refuse Aeroplan Membership in the Aeroplan Program for any reason, in its sole discretion, including, if you do not meet the requirements set forth in these Terms and Conditions, if you are suspected of fraud or illicit conduct or have had an Aeroplan Membership previously revoked or terminated by Aeroplan.
Unauthorized reproduction of any Aeroplan Membership card or number, or fraudulent misrepresentation of an Aeroplan Membership is prohibited and can result in legal action. Aeroplan Membership cards and Membership numbers belong to Aeroplan and may be revoked at any time in its sole discretion.
To summarize the above provisions:
Aeroplan may limit the number of welcome bonuses that are received by a member from Aeroplan affiliated credit cards in any period;
Examples of excessive use of welcome bonuses includes applying for multiple Aeroplan credit cards across multiple product types (i.e. entry, core, premium) or across multiple financial institutions that issue Aeroplan credit cards; receiving multiple welcome bonuses; and cancelling or stopping use of Aeroplan credit cards shortly after receiving a welcome bonus.
Aeroplan reserves the right to suspend, revoke or terminate a member who receives excessive welcome bonuses. It may also freeze an account while it investigates and refuse to credit the account or may debit the account.
It's not unusual for financial institutions that issue credit cards to seek to restrict credit card churning, such as American Express limiting welcome bonuses on each credit card to once in a lifetime. What is unusual here is that it's not the financial institution, rather, it is the loyalty program that is attempting to restrict credit card churning. One can only assume that Aeroplan has some financial stake in the welcome bonuses that are being issued by financial institutions with Aeroplan affiliated credits cards. It also suggests that Aeroplan credit card churning has become a problem for Aeroplan.
What's also unusual is that this is not simply an attempt to prevent members from signing up for and cancelling the same credit card from the same financial institution repeatedly. Rather, the new terms and conditions purport to prevent a member from signing up for an Aeroplan credit card issued by, for example, TD, then cancelling that card after receiving the credit card bonus and then some time later signing up for an Aeroplan card with CIBC and receiving a welcome bonus. Despite the fact that you are dealing with two different financial institutions, such activity would appear to potentially be a breach of the Aeroplan terms and conditions.
What is not clear, however, is what specific behaviour will cause one to be in breach of the terms and conditions. If a member receives two welcome bonuses a year, is that considered "excessive" by Aeroplan? Also, the terms and conditions reference Aeroplan limiting the number of welcome bonuses "in any period". Over what period of time will multiple welcome bonuses be considered a breach of the terms and conditions? Three months? One year? Two years? Similarly, if one applies for two Aeroplan credit cards such as a premium card issued by American Express and an entry card issued by CIBC and fails to diligently use one of those cards or cancels one of the cards after receiving a welcome bonus, will that considered to be off-side the terms and conditions? It remains to be seen whether this is just a warning shot over the bow or if Aeroplan intends to actually start refusing to award welcome bonuses or cancelling accounts all together.
Depending on how Aeroplan actually enforces these provisions in practice, Aeroplan may have just moved far beyond the terms and conditions of even the most strict financial institutions that issue credit cards when it comes to welcome bonuses. Too draconian approach may cause people to simply forego an Aeroplan branded credit card and stick with American Express credit cards that allow one to covert points to Aeroplan.
Conclusion
Aeroplan has updated its terms and conditions with strong language that provides Aeroplan with the ability to stamp out Aeroplan credit card churners. While at this time it's not clear how strictly Aeroplan intends to enforce the new provisions, one should be extremely cautious with opening multiple Aeroplan credit cards, receiving multiple welcome bonuses or cancelling Aeroplan credit cards or failing to use the credit cards shortly after receiving the welcome bonuses - at least until we see how, in practice, Aeroplan will be enforcing these new terms and conditions. The penalties can range from minor, such as not receiving a welcome bonus, to far more significant, being the cancellation of your Aeroplan account permanently and the loss of all your accumulated Aeroplan points. One would hope that Aeroplan will be judicious in its application of the terms and conditions and only focus on the most egregious violators. Time will tell.