It is very common for businesses – small and large – to want to utilise gift cards, gift vouchers or gift certificates as a marketing tool for promoting their business. It is a strategy that is used to bring new clients and customers on board by providing freebies or discounts. Often, this is an effective means of acquiring new leads and ultimately new, long term, loyal customers. Like most marketing practices, the Australian Securities and Investment Commission (ASIC) takes a keen interest in how these gift vouchers are presented to the unsuspecting consumer. In particular, ASIC will examine the wording of the offer, and decide based on this assessment whether any unreasonable (mis)representations are being made. There are a number of important considerations when utilising gift cards in your marketing approach.

Reloading

Gift vouchers cannot be reloaded, which means that the company redeeming the gift voucher cannot then put more money onto the card, as this kind of activity would act in a very similar way to a credit facility. Separate credit facility laws would govern this kind of activity.

Put another way, gift vouchers cannot be treated in such a way so as to become transferable forms of currency. If you are not sure whether your business’ treatment and use of gift vouchers is legal, contact a commercial lawyer and seek legal advice.

Displaying the expiry date

In general, when a consumer comes to a particular business to use or ‘redeem’ their gift voucher, they will not be permitted to do so if the expiry date has already passed. It should be noted, however, that expiry periods are generally subject to a reasonable period of time. What is ‘reasonable’ may differ from case to case, however, generally 12 months will be the minimum. Of course, the consumer and the business whose voucher is being used can negotiate the expiry period, but the ‘reasonable’ threshold will still apply.

Redeeming the voucher for cash

Gift vouchers will always have terms and conditions attached to them. These terms and conditions typically express that cash cannot be redeemed in exchange for the voucher. Despite this, some businesses will redeem the remaining balance of a voucher or gift card in exchange for a cash payment. Under Australian law, it is not permitted to exchange these vouchers for cash, in whole or part.

Terms and Conditions

Terms and Conditions of using the voucher must, at all times, be clearly communicated to the public, i.e. the buyer and the redeemer of the voucher. These terms and conditions should specify when the voucher expires, as well as any limitations on using the voucher.

Conclusion

The use of gift vouchers is extremely popular, as it is an effective method for promoting the goods and services of a business, and gives consumers a way to ‘gift’ a brand without having to worry about choosing the wrong gift. An effective gift voucher campaign can certainly broaden the customer base if done effectively. Use of gift vouchers should always be done within the limits of the law so that your business does not end up having to explain to ASIC why it appears to be using these vouchers in a manner that breaches Australia’s credit facility laws. The negative publicity that this kind of conduct can bring may also be damaging to the brand.

If you’re unsure whether you are using, promoting and redeeming these vouchers in a lawful manner, contact a business lawyer and seek legal advice. Our lawyers have drafted terms and conditions for gift vouchers and understand what needs to be included to make them legally effective.

For a no-obligation consultation, contact LegalVision on 1300 544 755.

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