You know that sinking feeling you get when you receive your usual Christmas gift card from that kind relative, and suddenly realise that you haven't spent the gift card from last year. You check last year's gift card and, sure enough, it's just passed its expiry date. Perhaps you will be able to sweet talk your friendly retailer into honouring the card, but you know not to get your hopes too high. In future, national laws to introduce a three-year minimum expiry period might help you settle into your Christmas pudding.
Why do we need new gift card laws?
In the words of the Assistant Treasurer:
"Gift card terms and conditions vary widely, making it hard for consumers to understand their rights and obligations. Consumers are often frustrated and experience financial loss from expired cards.
There is currently no uniform regulation for minimum expiry periods and post-supply fees, with different rules applying across jurisdictions. The inconsistencies have created uncertainty for consumers and a regulatory burden for businesses…
Three years has generally been considered a reasonable period of time for consumers to use gift cards and simultaneously provides businesses with sufficient certainty to manage their liabilities."
What are the proposed laws?
The Treasury Laws Amendment (Gift Cards) Bill 2018 was introduced into the House of Representatives on 20 September 2018. This Bill aims to introduce a national regime for the regulation of gift cards. The proposed requirements include:
- introducing a minimum three-year expiry period for gift cards (adopting the minimum standard which came into effect earlier this year in New South Wales);
- requiring the gift card expiry date to be prominently displayed on the card; and
- prohibiting the payment of post-supply fees, such as inactivity and "balance-checking" fees.
The proposed three-year minimum period means that businesses will need to ensure that any gift cards are redeemable for at least three years from the date the gift card is supplied. Businesses can provide a longer expiry period if they wish, and there are a number of high profile businesses which now offer gift cards that have no expiry date.
Businesses will be required to display the month and year of the expiry date on the gift card (or, alternatively, state that the gift card "does not expire" or has "no expiry date"). Providing the expiry date on a separate document will not be sufficient; it must be prominently displayed on the gift card itself.
Businesses will be prohibited from charging certain fees after a gift card has been supplied (eg. balance-checking fees). It is proposed that Regulations will be made which will specify a list of fees that can be charged.
What will the proposed penalties be?
If the new laws are enacted, there will be a maximum penalty of $30,000 for companies and $6,000 for individuals.
The proposed Bill also includes a regulation-making power which would provide certain exemptions. It is expected that these will be similar to the NSW legislation which provides exemptions for:
- cards or vouchers supplied as part of customer loyalty programs;
- cards supplied in substitution for returned goods;
- some types of prepaid cards or vouchers; and
- debit cards, credit cards and prepaid travel cards supplied by financial institutions.
What does this mean for businesses and consumers?
If the proposed legislation is enacted, the new laws will apply to gift cards sold on or after 1 November 2019 (just in time for the Christmas peak period).
Businesses should monitor the progress of the new laws and start thinking about reviewing the terms and conditions of their gift cards. Consumers can hopefully look forward to spending their gift cards for longer, rather than discovering too late that the card has expired!