A gift card is a very common product offered by retail and e-commerce businesses. One of the main complaints customers have with gift cards are the terms and conditions associated with expiry dates. On 1 November 2019, changes to the Australian law came into place to provide consumers who hold gift cards with greater protections. If your business sells gift cards, you should become familiar with the changes in law and make changes to ensure you are legally compliant. This article will unpack: 

  • what the key changes are;
  • which types of gift cards they apply to; 
  • what the penalties for non-compliance are; and
  • some steps you can take to stay on top of the changes.

What Are the Key Changes?

The Australian Consumer Law (ACL) has been updated to provide a national framework for gift card protections for consumers. These changes in the law will not affect gift cards sold before 1 November 2019. 

However, for gift cards that you sell after 1 November 2019, you should ensure that:

  • they are redeemable for at least three years from the date of sale;
  • the expiry date is prominently displayed; and
  • the terms and conditions of the gift card do not allow you to charge post-supply fees.

A post supply fee is a fee that the recipient of the gift card receives after they have been supplied the card.

For example, it could include a fee for enquiring about the remaining balance on a gift card.

They can erode the balance on a gift card over time and, in effect, operate as a pseudo expiry date.

Who Do the New Laws Apply To?

The new national gift card laws apply to anyone who supplies a gift card to consumers during a business transaction. This means that the change of law will most likely apply to your business if you sell gift cards.

However, the new laws will not apply if you are selling gift cards to another business, who will then re-sell them.

For example, Big Shark Pty Ltd sells 2000 gift cards to Friendly Fish Friends Pty Ltd. Friendly Fish Friends Pty Ltd has purchased the gift cards to sell to their customers. In this case, the gift card laws will not apply to Big Shark Pty Ltd. 

However, as Friendly Fish Friends Pty Ltd is selling the gift cards to customers, they will need to comply with the changes in the law.

What is Excluded?

The gift card law changes apply to all gift cards unless they explicitly excluded from the updates. Some key exclusions include:

  • credit cards and debit cards;
  • public transport tickets;
  • customer loyalty cards;
  • gift cards for goods and services only available for a limited period (for example, a museum exhibition that is only in Sydney for six months);
  • gift cards donated free of charge (for example, a one-day promotion run by a local shopping centre where shoppers are given a $15 voucher for one day only);
  • cards sold for a particular good or service at a genuine discount (for example, a $50 gift voucher for a spa experience valued at $100);
  • gift cards supplied as part of an employee rewards program;
  • second-hand gift cards; and
  • gift cards provided as part of a temporary promotion.

What Are the Penalties?

These changes in the law will be monitored by the Australian Competition and Consumer Commission (ACCC). If your business issues non-compliant gift cards to consumers, the ACCC could fine you up to $30,000 or $6,000 if you are not a company. 

The ACCC may also issue infringement notices if they believe you have not complied with the law. These notices will also be accompanied by a fine.

Compliance Checklist

It is crucial your business is familiar with the changes in law and puts procedures in place to maintain compliance. 

Here are four quick tips for ensuring your business is compliant:

  1. check the expiry dates on all gift cards issued after 1 November 2019 to ensure the expiry date is clearly displayed and longer than three years;
  2. review your gift card terms and conditions to ensure no provisions are allowing post-supply fees and that the term of the gift card is more than three years;
  3. unless you are sure the new laws are excluded from your business activity, do not tell consumers the laws do not apply to you; and
  4. check to see if any further laws apply in your state.

Key Takeaways

Gift cards are sold across a large array of Australian business and are a popular gift idea. Given the issues consumers have had with expired gift cards, new national laws were introduced on 1 November 2019 to further protect consumers. If you run a business selling gift cards, you should ensure that your cards:

  1. have an expiry period of three years or more;
  2. prominently display the expiry period; and
  3. do not include any post supply fees.

If you need assistance with understanding the new laws or preparing your gift card terms and conditions, contact LegalVision’s contract lawyers on 1300 544 755 or fill out the form on this page.

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