If your business sells gift cards you should be aware of the current consumer laws, which came into effect on 1 November 2019.
Legal requirements for gift cards
There are three key parts to updated gift card laws, which apply to cards and vouchers supplied to consumers from 1 November 2019:
- A three year mandatory minimum expiry period for gift cards applies from the date the card is sold to a customer.
- Gift cards must clearly show the expiry date.
- Post purchase fees can not be charged.
Tip: Any gift card sold or supplied before 1 November 2019 date will continue to carry the same expiry period and fees as applicable at the time of purchase. The new laws can’t be retrospectively applied to these purchases.
Which gift cards are included and excluded?
The three year minimum expiry period does not apply to gift cards that:
- can be reloaded or topped up
- have been donated for promotional purposes (eg. a business running a one day only promotion where all customers are provided with a $10 voucher to use in store on that day only)
- gift cards or vouchers that are given as a bonus in connection to the purchase of goods or services for use in the same business (eg: customer loyalty programs that provide a $10 voucher if you spend a certain amount in one transaction in store).
- are only available for a specific time period (eg. free entry to a seasonal event)
- have been supplied as part of a temporary marketing promotion
- have been given as part of a customer loyalty program or employee reward scheme
- are supplied as a genuine discount (eg. buy a $100 product for $60)
- second- hand gift cards.
Which fees can or can’t be charged?
The following post purchase fees can no longer be charged:
- activation fees
- account keeping fees
- balance enquiry fees.
The following fees can still be charged (if applicable):
- overseas transaction fees
- booking fees
- payment surcharges.
What happens if I don’t comply with these rules?
Under Australian Consumer Law, gift cards that don’t comply with the new laws will be considered void and the new legal requirements will apply regardless of what is stated on your gift card.
Breaching the new laws could also result in a fine.
What happens when a business changes owners?
If there is a change of ownership the new owner does not have to honour an existing gift card or voucher, unless:
- the business was sold as a ‘going concern’ (this means the assets and liabilities of the business were transferred to the new owner)
- the business uses a company structure and the new owner has purchased shares in the existing company.
You may, however, choose to honour the voucher as a good will gesture to the customer.
Visit the Australian Consumer Law website for more information on the new gift card laws.