What are the Legalities Surrounding Expired Gift Cards?

While it is certainly common for some businesses to impose certain conditions, like expiry dates, over the use of their company gift cards, it is not a legal requirement. Nor is it illegal to attach an expiry date to a gift card. The expiry date on a gift card simply limits the time available to a gift-card holder to legally redeem the ‘gift’. Although some businesses are flexible with their approach to expired gift cards, even offering a ‘grace’ period, others are stricter and offer less flexibility.

What is the Difference Between Gift Cards and Cash?

Although some consumers might feel as if gift cards should be as liquid as cash and redeemable at any point, this is largely a misperception about the true nature of a gift card. Attached to a gift card are a bundle of terms and conditions, not unlike a contract. The reason why some consumers might compare a gift card to cash is probably due to the marketing messages (words and phrases) used by the business issuing these gift cards.

However, by their very nature, gift cards are not cash and are subject to inherent restrictions and limitations. In other words, when consumers purchase gift cards, they are essentially entering into a contract that allows them to purchase goods or services from a retailer, but in a restricted manner. For legal advice on the limitations to these restrictions, contact an experienced lawyer, preferably with in-depth knowledge of the Australian Consumer Law.

Why Do Only Some Gift Cards Have Expiration Dates?

It’s true that only some businesses issuing gift cards will impose a time limitation on the use of the card, while others will not. Although offering a longer expiry period might be a great way to become more competitive in your particular industry, it is not a requirement. And, in contrast to what one might think, some studies have shown that shorter expiry periods, in fact, have higher rates of redemption.

Why are Retailers Allowed to Impose Expiry Dates on Their Gift Cards?

Gift-card issuers are well within their rights to attach expiry dates to the redemption of the card for various reasons, including:

• to prevent the build-up of ‘undeclared liabilities’;
• to ensure services are provided within a reasonable period of time;
• to ensure supply of the goods is possible; and
• the nature of the business, its core activities, size, structure and financial position.

Key Takeaways

Although only some businesses will attach a time limitation to their gift cards, it’s quite safe to assume that all gift cards will have certain terms and conditions of use attached to them, which highlights their contractual nature. While some businesses are happy and willing to accept expired gift cards in the name of maintaining customer loyalty, others are less amenable to do so.

If you run a business that offers gift cards to its customers and would like to review or draft the terms and conditions for use of the cards, contact LegalVision on 1300 544 755 or fill out the form on this page. Our consumer lawyer and business lawyers may be able to help you with your gift card concerns.