My website offers a social network and a software-as-a-service that allows users to build their own website. The SaaS solution has three pricing plans ranging from free to $15 monthly.

Users of the social network earn 'points' for actions they perform within the social site.

How much of a legal mess is it to allow users to 'redeem' their points to:

  1. Unlock features of a website using the free pricing plan
  2. Add subscription days to a paid website plan at $0 cost -or- allow them to use their points to get a percentage discount on future paid plan monthly costs

My ultimate concern is that someone will construe that N number of points has some real world value based on the discount they could receive when purchasing a service. Does a system like this fall under gift card and trading stamp laws when you don't have to make purchases to earn the points?

Please note: this is a startup company with a tiny/non-existent budget.

1 Answer 1


It's not clear what you mean by "intrinsic value", but it appears that you mean "cash value". It is so possible that almost none of the rewards programs I'm enrolled in allow points to be converted to cash (banks and credit cars are an exception). If the contracts that you write are badly written, you could get into a legal mess because the agreement implies that a customer can exchanges points for cash back, so your lawyer could write a clause that explicitly denies that. You could also get in a legal mess if you promise to give some benefit at the cost of N points, which are accumulated by them doing certain things, and you mess up the record-keeping or award of points (e.g. award a point for each blog post, and fail to keep track of the 10,000 blog posts by user X). The third type of legal mess that you might get into is improper accounting w.r.t. income, expenses and taxes, but that's a general risk not limited to rewards programs.

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