Insights / November 8th, 2018

Three year expiry for gift cards

The Treasury Laws Amendment (Gift Cards) Bill 2018 (“Bill) will provide a national regime for the regulation of gift cards and vouchers. Currently, gift cards in New South Wales are subject to a three year minimum expiry, with the same requirements being implemented in South Australia later in 2018.

In addition to the three year expiry requirement, the Bill amends the Australian Consumer Law to provide that:

  • Information about expiry dates on gift cards are prominently displayed on the card itself;

  • Terms and conditions cannot allow certain post-supply fees to be charged; and

  • Most post-supply fees will be banned.

A business that contravenes a section of the new law will commit an offence and be subject to a penalty of $6,000 (for an individual) and $30,000 (for a body corporate).

The explanatory memorandum for the Bill states that an estimated $70 million is lost by consumers each year due to short or vague gift card expiry dates. Prior to the Bill there was no national regulation of gift card expiry dates.

Part of the issue is that the user of the card, in most circumstances, is not the person that purchases the card. The current system relies on the purchaser of the card relaying the terms and conditions of the card on to the end user, particularly when expiry dates are not written on the cards themselves. With expiry dates ranging from a few months to several years it is difficult for users to know when they must use their gift card. The new system both extends the time users have to use their cards, and increases the transparency between users and businesses on expiry dates.

Most post-supply fees will be banned under the new regime. Post-supply fees are generally fees that are deducted from the value of a gift card when used. Regulations will provide an exhaustive list of post-supply fees that can be charged, with all other post-supply fees banned.

New South Wales

Most gift cards and vouchers sold from 31 March 2018 in New South Wales are already subject to a minimum three year expiry period under NSW fair trading legislation. There are some exceptions to the NSW law such as gift cards or vouchers that are given free to a customer, and gift cards for goods or services that are only available for a limited period (for example, a gift card for entry into a museum for a particular exhibition).

South Australia

In South Australia, a bill has passed both Houses of Parliament prohibiting the sale of gift cards with an expiry of less than three years. The Fair Trading (Gift Cards) Amendment Bill 2018 (SA) is yet to come into operation but the South Australian government has stated that the new laws will be in effect before Christmas.

Many gift card issuers have already moved to a three year (or greater) expiry system to avoid having different expiry periods in different states. Examples include the department stores David Jones and Myer, as well as big retailers such as Rebel Sport, Priceline and Harvey Norman. Coles now have 4 year expiry dates on gift cards whilst Woolworths have opted to have no expiry date on gift cards.

Businesses that operate in several states may find administrative difficulty in handling different gift card expiry laws in different states. Businesses currently have to provide three year minimum expiry dates on gift cards in New South Wales (and shortly in South Australia), whilst the other states remain unregulated until November next year.

If you would like to know more information about the new laws or whether your business will need to change its gift card policy, please contact Hillary Ray or a member of the financial services team.

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