With the festive season upon us it is important for retailers to be aware of new laws in Australia relating to gift cards. All gift cards supplied to consumers in Australia from 1 November 2019:
(a) must have a minimum three year expiry period
(b) must prominently display information regarding the expiry of the gift card on the card itself
(c) must not impose certain post-supply fees.
The new laws also make void certain terms and conditions that have previously been used by suppliers of gift cards.
What gift cards does this apply to?
The new laws only apply to gift cards or vouchers sold from 1 November 2019. The gift card does not need to be a physical card – it can be an electronic gift card. Any gift card or voucher sold prior to 1 November 2019 is not required to meet these requirements, however they are subject to any applicable state laws that apply (including the gift card laws in New South Wales which are similar to those in the new Commonwealth legislation).
What gift cards does this not apply to?
The new provisions only apply to certain gift cards, with exemptions for 'cards' that are:
• gifted for promotional purposes
• available only for goods that are available for a specified period (e.g. a certain movie screening in a cinema)
• supplied at a genuine discount (e.g. a gift voucher for a meal valued at $100 but sold for $40)
• part of an employee reward scheme
• part of a customer loyalty scheme (e.g. spend $100 in store and receive a $10 store credit)
• second hand gift cards
• part of a temporary marketing promotion (e.g. buy a television and receive a free gift voucher to a streaming service)
• supplied to certain charities or government agencies.
Further, gift cards that are able to be reloaded (other than a reversal of a payment made or a correction of an error) and cards redeemable for electricity, gas and/or a telecommunication service are not considered gift cards.
What meets the requirement of 'prominent display'?
The Australian Consumer Law specifies that a gift card must not be supplied unless it contains one of the following:
• the expiry date of the gift card
• the month and year the gift card expires
• the date, or month/year the gift card is supplies and a time period during which it can be redeemed
• the words 'no expiry date' or words to that effect.
This can be achieved through various forms of words including for example:
• "Supply date: March 2020. This card will expire in 3 years"
• "This card expires 5 years after supply. Supply date 15/8/20"
• "Valid for 3 years from 11/19".
Providing a date for expiry in both DDMMYY and MMYY format is acceptable. What is not acceptable, however, is having the expiry date anywhere else but the gift card itself i.e. having the expiry date on a cardboard leaflet supplied with the gift card.
Fees or charges that are not "post-supply fees and charges"
There are some fees that a consumer may incur when using a gift card that are not considered to be breaching the ACL. These include:
• Booking fees
• Currency exchange fees
• Fees or charge relating to the reissue of a lost or stolen gift card
• Payment surcharges that are permissible under the ACL.
What are the void terms and conditions?
A term or condition that reduces the eligible period to redeem the gift card under three years, or terms which implement post supply fees are considered void. For example:
• Including a term which requires the purchaser to activate the gift card within 30 days or the funds are forfeited;
• The requirement that a user must use the card every month or else the card is void.
What penalties apply for non-compliance?
Should a gift card be supplied with less than a three year expiry period, the maximum pecuniary penalty is $30,000 for a body corporate and $6,000 for other persons. The same penalty applies should the expiry of the gift card not be prominently set out, or a business implements post supply fees or void terms and conditions.
In addition, the ACCC has been given the power to issue an infringement notice if it has reason to believe a person has provided a gift card in a way which breaches the new gift card provisions. Infringement notices carry a penalty of $11,500 for a body corporate and $2,420 for other parties.
There is also the risk that, by indicating that a gift voucher has a shorter expiry date than three years, or advising a customer that a fee will apply when using a gift card that has already been purchased, a retailer will be regarded as engaging in misleading or deceptive conduct in breach of the Australian Consumer Law (Schedule 2 to the Competition and Consumer Act (2010)). This carried significantly higher penalties.