Gift Card Expiry Dates–Federal Government legislation
The Federal Government has released draft legislation that will set minimum expiry dates for gift cards, require disclosure of the expiry date on the actual gift card, and ban the charging of certain post-supply fees.
The legislation is open for comment from 26 July until 9 August 2018.
A summary of the legislation, as advised by the Government, is set out below.
Application of the law
The Australian Consumer Law will be amended to apply certain provisions to all gift cards issued in Australia (subject to the exceptions noted in the legislation), even if those products are already regulated as a financial product under the ASIC Act and Corporations Act.
The gift card reforms are intended to provide a nationally consistent set of regulations for gift cards. The reforms are subject to the agreement of state and territory Consumer Affairs Ministers. The Federal Government has not indicated whether the reforms will over-ride the current NSW and proposed SA legislation related to gift cards sold in those states.
Key features of the new law
- Gift cards will have a minimum three year expiry period.
- The expiry date must be displayed prominently on the card itself.
- Certain post-supply fees cannot be charged after gift cards are issued.
- Regulations will be made to exempt certain gift cards from the law.
- The amendments will apply to gift cards supplied on or after 1 November 2019.
Definition of gift card
A gift card is defined to mean an article that is commonly known to be a gift card or voucher (physical or electronic/digital) and is redeemable for goods or services.
Gift cards that are supplied, in trade or commerce, to an ultimate consumer will be covered by the legislation.
The Government has stated that the following types of card are not “commonly known to be a gift card” and should therefore not be caught by the legislation:
- credit card
- charge card
- debit card
- public transport card
A card or voucher does not need to be labelled or marketed as a “gift card” in order to be caught by the legislation.
The definition can include cards provided by (for example) insurance companies to policy holders to discharge a legal liability under the terms of a policy (ie an insurance payout or rebate).
Minimum expiry date
Gift cards that are covered by the legislation are required to be redeemable for at least 3 years from the date the gift card is supplied.
The expiry date must be set out prominently on the gift card itself. Displaying the expiry date on a separate document at point of sale is not sufficient.
Where the date is displayed as MM/YY (ie no day within the month is specified), the expiry date must be the last day of the month.
If the gift card does not expire at all, that must be stated on the gift card itself (eg “does not expire”, “never expires”, “no expiry date”).
Regulations, which are still to be drafted, will list the fees that can be charged after a gift card is supplied. Only the fees listed will be able to be charged.
The attached Consultation Paper proposes that the following fees would be permitted:
- fees/charges for making a booking;
- fees/charges for disputing a transaction;
- foreign currency transaction fees/charges;
- fees/charges for the re-issue of a gift card that has been lost, stolen or damaged;
- fees/charges for processing a transaction if:
- the transaction involves a gift card; and
- the fees/charges do not exceed the amount of fees/charges payable to the operator of the payment system used to process the transaction.
Clarifying the definition of “gift card or voucher”
The Government proposes passing Regulations that would clarify the definition of “gift card or voucher”. The Government is currently seeking feedback on the following:
- Discount coupons and vouchers – the legislation does not currently address discount coupons and vouchers, but the Government does not believe they would meet the proposed definition of a gift card. The Government is seeking comment on whether it is necessary for the regulations to explicitly exempt discount coupons and vouchers.
- Reloadable prepaid cards – the Government is proposing exempting from the definition of “gift card” any card (physical or virtual) that can have its value increased after issue (other than due to a reversal/error correction).
- The Government believes that single load prepaid cards are ‘commonly known’ by consumers as gift cards, and therefore will be covered by the legislation.
- Cards redeemable for electricity, gas and telecommunications – are proposed to be specifically exempted.
- Cards redeemable for time-limited goods and services – are proposed to be specifically exempted (eg gift cards providing entry to a temporary exhibition or theatre production).
- Cards and vouchers issued for temporary marketing purposes – are proposed to be exempted. To be covered by the exemption, the card/voucher must:
- only be redeemable for a particular good or service and sold at a genuine discount; or
- be given in connection with purchase of a good or service and only be redeemable in-store; or
- be given for no consideration (ie completely free).
- Cards and vouchers that can be exchanged for a particular good or service and sold at a genuine discount – are proposed to be exempted. To be covered by the exemption, the discount must be “genuine”. The Government is seeking feedback on whether a minimum percentage discount to retail price should be included in the Regulations eg 30% discount.
- Cards and vouchers given in connection with a purchase and can only be used in the same business – are proposed to be exempted. To be covered, the card/voucher must be given upon purchase of a good or service, and can only be redeemed at the same store (eg an online clothing retailer that provides a $10 gift card that can be used at the same online store when a consumer buys any 3 shirts from the store). The exemption will not apply where the business running the promotion provides a gift card for use at a different business (eg a health insurer offering a $200 gift card for use at a major retailer if a new customer takes out a health policy).
- Cards and vouchers where no consideration is provided in exchange – are proposed to be exempted. To be covered, the consumer must not have paid for the card/voucher directly or indirectly. For example, the exemption would not apply where:
- a gift card is provided under a loyalty scheme when signing up a friend or exchanging points for the gift card; or
- a consumer wins a gift card after entering a raffle after they purchased a product; or
- a consumer who pays a fee to become a club member is sent a birthday gift voucher for a free meal at the club bistro.
Extent of the exemptions
The Government is considering whether it is appropriate to exempt the above cards and vouchers from all of the new requirements (3 year expiry period, displaying an expiry date and a ban on post-purchase fees) or only particular requirements (such as the 3 year expiry period, with all other requirements to apply).
Failing to meet the above requirements is a strict liability civil offence, carrying a maximum penalty per offence of $30,000 for a body corporate and $6,000 for individuals.
The ACCC will have power to enforce the law. The ACCC may also:
- issue an injunction preventing a gift card issuer or distributor from supplying gift cards;
- require a person to publicly disclose certain information (eg place an advertisement in a national newspaper stating that they have breached the law);
- issue an infringement notice, which may require payment of a penalty of up to $11,500 for a body corporate or $2,420 for an individual.
This publication is a summary of news about legislation and regulatory information. It is not legal advice and should not be relied upon as such. Specific legal advice about your specific circumstances should always be sought separately before taking any action based on this publication.