Skip to Content

xuveo

Changes to Gift Card rules commence on 1 November 2019

1 October 2019

From 1 November 2019, changes to the rules around gift cards and gift vouchers will come into effect.

Retailers and businesses that sell gift cards or gift vouchers will need to ensure that they take immediate steps to comply with the new requirements for all vouchers and cards sold on or after the 1 November commencement date.

The Australian government passed amendments to the Australian Consumer Law to more closely regulate gift cards and gift vouchers in October 2018. The changes are implemented under the Treasury Laws Amendment (Gift Cards) Act 2018 (Cth)

The key changes introduced by the legislation are set out below. The new laws focus on increasing transparency around card expiry dates and banning retailers from charging additional fees to access and use gift cards.

What is a 'Gift Card' or 'Gift Voucher'?

A gift card is broadly defined as follows:

99A Meaning of gift card

A gift card is:
(a) an article (whether in physical or electronic form) that:
(i) is of a kind that is commonly known as a gift card or gift voucher; and
(ii) is redeemable for goods or services

The government also has power to make regulations including or excluding particular types of gift cards in the definition.

Minimum Expiry Period - 3 years

For gift cards supplied to a consumer after 1 November 2019, the supplier must ensure:

  • the gift card does not expire less than 3 years after the date of issue
  • if the gift card has an expiry date - the expiry date or validity period is clearly stated on the gift card itself 
  • if the gift card has no expiry date - the gift card shows a clear statement to that effect.

If a gift card has a shorter expiry date, the legislation overrides the shorter expiry and imposes the minimum 3 year expiry period.

It will be important for businesses to either ensure that all gift cards are compliant with the new regime, or keep records of which gift cards were issued prior to the 1 November 2019 start date (such as by recording the issue date on the gift card itself).

At the time of writing, the ACCC website lists the following types of cards as being exempt from the minimum 3 year expiry period requirement:

This [3 year minimum expiry term] requirement does not apply to gift cards that are:

  • able to be reloaded or topped up
  • donated for promotional purposes (eg a business handing out $15 vouchers to passers-by for its grand opening)
  • available only for a specified period (eg performance of a visiting ballet company)
  • supplied at a genuine discount (eg $60 card for a massage valued at $100)
  • part of an employee reward scheme
  • part of a customer loyalty program
  • second-hand gift cards
  • part of a temporary marketing promotion (eg customers buy a certain product from Business A, which provides a $50 voucher to use at Business B)
  • supplied to certain charities or government agencies.

Post-Supply Fees will be illegal

As well, it will be unlawful to charge a “Post-Supply Fee” to a consumer. A Post-Supply Fee is a fee charged in relation to the gift card after it is supplied to a consumer, such as a charging a fee to redeem or use the gift card. Some charges are still permitted, such as lost or stolen card replacement fees, booking fees, currency exchange fees and payment method surcharges.

Penalties

Contravention of the above provisions will be an offence under the Australian Consumer Law - with penalties of $30,000 for corporations or $6,000 for individuals.

What is not addressed?

If a change of business owner has occurred (for example sale of the business to a new owner as a going concern, or transfer of the shares in a company that operates the business), the new business owner is required to honour gift cards issued by the previous business owner.

However, a key issue that has not been addressed in the amendments is security for consumers if the retailer goes into liquidation or insolvency.

Under current law, a gift card holder is treated as an unsecured creditor of the retailer. A gift card is essentially a kind of IOU; a ‘promise’ to provide goods or services to the value of the card. This means that if the retailer goes into liquidation, the gift card holder is at significant risk of being unable to recover the value of the gift card.

In recent years, several high-profile retailer collapses (including Dick Smith Electronics, Toys R Us and Roger David) have left consumers unable to redeem unused gift cards. In some cases administrators have sought to impose additional conditions on gift card holders (such as a requirement to make further purchases) in order to redeem the gift cards.

Consumers should be mindful the legislation amendments do not address these shortcomings. Further significant reform to insolvency law will be necessary to provide better protection to consumers.

 

Need advice?

Xuveo Legal can provide assistance in reviewing your gift card terms & conditions to ensure that they comply with the new legislation. Contact us today for further information.

 

*This article was originally posted on 11 December 2018 as 'Gift Card Reforms are coming in 2019'. It was revised and updated on 1 October 2019.

This post is intended for general information only and is not intended to constitute legal advice. You should obtain appropriate professional advice for your circumstances or contact us for further assistance.

Connect

Contact Form
vCard
Social Media
Mail
PO Box 5159
Mt Gravatt East Queensland 4122
Australia
Hours
Monday-Friday 9:00am-5:00pm (AEST). Closed Public Holidays. Meetings by appointment.