No more free coffee on your birthday? Companies rein in customer rewards programs — here's why

WASHINGTON (AP) — Reward programs, including birthday freebies and discounts, have long been a way for brands to build loyalty and incentivize spending. But now some companies are becoming a bit more stingy — and customers are taking notice.

Last fall, for example, many balked at Dunkin’s decision to stop offering a free drink on their birthday and instead give them triple loyalty points on their purchase. On June 1, Sephora started requiring a $25 minimum purchase for online customers looking to claim a free gift and 250 loyalty points during their birthday month. And Red Robin added a dine-in only and $4.99 minimum purchase requirement for customers to get their free birthday burger.

Changes to birthday rewards or redemption requirements aren't new. Starbucks, which gives its rewards members a free drink or food item for their birthdays, progressively limited the timeframe for redeeming that gift over the years — from 30 days, to one week, to four days and, finally, to just the date of your birthday in 2018.

Some experts say the cost of maintaining loyalty programs, as well as recent impacts of inflation and changes in consumer behavior since the start of the COVID-19 pandemic, are among the reasons why companies may be pulling back.