What are the Legalities Surrounding Expired Gift Cards?

If you run a business which sells gift cards, you need to be aware of the changes to laws surrounding expired gift cards. National laws introduced on 1 November 2019 impose strict regulations around the legal requirements of expiry dates on gift cards. If you do not comply with these new laws, your business could face fines of up to $30,000. This article explains what these legal changes are and when your business might not need to comply with the new laws.

What Are the Differences Between Gift Cards and Cash?

Customers can use cash in any way, at any time and at any venue that they want to spend it. Gift cards, on the other hand, generally have limitations attached to them in the form of terms and conditions. These terms and conditions will often limit:

• when customers can redeem the gift card;
• where customers can redeem the gift card;
• what they can use it for; and
• when customers need to use it by. 

When a customer purchases a gift card from you, you are essentially entering into a contract with them to purchase products from your store. As a result, the law has changed to help protect consumers from gift card unfair terms.

What Is the Minimum Expiry Period on a Gift Card?

As of 1 November 2019, all gift cards must have a minimum expiry period of three years. This was introduced as an amendment to the Australian Consumer Law (ACL) and applies nationally.

When issuing a gift card, you must ensure that the information about the expiry date is prominently displayed on the card itself. This can be done in three ways:

1. you clearly state the date the gift card will expire;
2. you clearly state the amount of time the gift card will be valid. If you choose this option, you must also clearly state the date the gift card was issued so that the consumer knows when the gift card will expire; or
3. if there is no expiry date for the gift card, you should clearly state that the gift card has no expiry date.

If your business offers gift cards, you should also be aware that it is illegal to charge certain post-supply fees on gift cards. Post supply fees are fees that reduce the value of the gift card over time. 

Other fees you cannot charge include: 

• account keeping fees; and
• balance enquiry fees. 

However, fees which are acceptable include:

• booking fees that you charge to those purchasing the same products with cash; and 
• fees related to the reissue of a lost, stolen or damaged card.

When Do the Laws for Gift Card Expiry Dates Not Apply?

The laws for gift card expiry dates apply to all businesses in Australia, including those online, when supplying a gift card to a consumer. Generally, if an individual is not acquiring a gift card to resell it commercially, they will be classified as a consumer. This means that if you supply gift cards to another business for the purposes of reselling them, the business resupplying them will need to comply with the gift card expiry laws. 

There are also a range of situations where the gift card expiry laws will not apply. Some of these include gift cards:

• issued as part of a temporary marketing promotion;
• donated free of charge for a promotional purpose – for example, if you hand out $15 vouchers to passers-by on the street;
• provided as part of an employee rewards program;
• supplied for the purposes of a customer loyalty program, like cafes who provide the 10th coffee for free;
• only available for a specified period of time – for example, if an event such is only showing for a specific period of time; and
• supplied at a genuine discount, like one valued at $100 and sold at $75.

What Are the Penalties for Non-Compliance?

The Australian Competition and Consumer Commission (ACCC) is responsible for ensuring businesses are compliant with gift card expiry laws. As a deterrent, there are penalties of up to $30,000 for companies and up to $6,0000 non-companies for breaching the gift card laws. 

Key Takeaways

If you run a business that offers gift cards to your customers, you should be aware of the legalities surrounding the expiry dates of gift cards. In particular, any gift cards issued after 1 November 2019 that do not fall within the list of exceptions must be valid for a minimum of three years. They must also clearly state the expiry term on the gift card itself. If you need assistance with understanding the new laws or preparing your gift card terms and conditions, contact LegalVision’s Commercial Contracts lawyers on 1300 544 755 or fill out the form on this page.