Legal Regulation of Consumer Loyalty Programs of Digital Platforms

The objectives of this paper are to determine the legal nature of loyalty programs of digital platforms and to determine the legal regulation applicable to the relations on the implementation of such programs. To achieve these objectives, the author discovers prerequisites for the emergence of loyalty programs and their economic goals, the concept of a loyalty program for the purposes of legal research, defines the range of potentially applicable legal regimes and draws conclusions on the reasonability of their application, as well as discovers what legal relations arise between the digital platform and its users in connection with the implementation of loyalty programs. The author considers the applicability of the following legal regimes to loyalty programs of digital platforms: money, digital currency, digital rights, public promise of reward, public contest, games and betting. The paper also considers the legal nature of the relationship between a digital platform and a consumer in connection with the implementation of a loyalty program, as well as the issues of control over compliance with the loyalty program by partners of a digital platform. The main results of the paper are the following: (1) the regimes of money, digital currency, public promise of reward should not be applied to loyalty programs, (2) the regime of public contest is suitable for certain loyalty programs, but this approach is still unrealizable in practice, (3) the regime of digital rights is not applicable, although it could be interesting for some digital platforms, (4) the regime of games and betting is applied to a number of loyalty programs in practice, which is a consequence of too broad interpretation of the concept of “games”, (5) the loyalty program is a system of contractual legal relations, (6) the existing mechanisms of control over the compliance with loyalty program by platform partners have a number of legal flaws that can be eliminated through alternative contractual models.