Platform Overview

The Gift that Keeps on Giving: Gift Card Laws in NSW

Consumers rejoice as new amendments to the Fair Trading Act 1987 (NSW) on minimum expiry dates of gift cards are set to take effect from 31 March 2018.

Gift Cards – Presents of the Present

A while ago, it was perfectly acceptable for your distant relative to slip you a crisp 20 dollar note out of a grudging obligation during holiday gatherings. Now, a more personal offering is required. Your third cousin Will demonstrates his astute awareness of your tastes and preferences by giving you a gift card to Woolies rather than Coles. His rank goes up in your mental scale of favourite relatives.

A gift card is a card or voucher in hard copy or electronic form, that can be used to redeem goods or services. However, the prevalence of unused gift cards and vouchers currently make businesses nearly $60 million annually, in the form of ‘breakage’. The leftover $1.15 on your gift card and the slowing accumulating pile of expired vouchers at the bottom of your drawer all contribute to this sum.

The new amendments aim to address this issue by preventing companies from adding hidden administrative fees or early expiration dates on gift cards.

The Changes

The NSW Government has recently passed changes affecting gift cards by enacting the Fair Trading Amendment (Ticket Scalping and Gift Cards) Act 2017 (NSW). The new laws will:

  • Establish a minimum expiry date of 3 years on all gift cards sold to consumers; and
  • Prohibit charging any fee that reduces the value of the gift card, after the sale of the card.

The amended legislation also imposes penalties on businesses who do not comply in the form of a penalty notice of $550 or a maximum penalty of 50 penalty units (currently $5,500).

Some exceptions to these new laws include cards provided to substitute returned goods, cards provided by financial institutions such as a credit or debit cards, prepaid cards for phone credit, and cards or vouchers supplied as part of loyalty programs.

Impact on Businesses

Australian Retailers Association (ARA) has complained that these new laws would place an “unnecessary regulatory burden” on businesses, and companies like RedBalloon have already changed their policy to offer vouchers and gift cards with a 3-year expiry date nationally.

If your business sells gift cards or vouchers, you may need to follow the steps of RedBalloon to ensure you do not face any penalties. This could involve updating the terms and conditions on the gift card, and on your website.

Going Forward

Other states and territories are being encouraged to follow suit with NSW’s laws. The Victorian government has pushed the federal government to take action regarding gift card laws, to ensure consistent consumer protection standards across the country. Both Queensland and South Australia are open to strengthening consumer protections in this area as well. In any case, many companies have already extended these changes to a nation-wide scale, to avoid consumer confusion and discontent.

What do you think about this amendment? Will extending the minimum expiry date encourage you to use your gift card? We would love to hear from you!

Let us know your thoughts by tagging us #lawpath or @lawpath.

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