News

23 October 2018

A gift for consumers in time for Christmas

In a win for consumers, the Commonwealth government passed legislation on Thursday providing for greater consumer protections in relation to gift cards.  It is expected this legislation will come into force on 1 November 2019.

The new laws provide that gift cards will now be required to have a minimum expiry period of three years and also ban most ‘post-supply’ fees for gift cards and vouchers.

What is a gift card?

While many of us would expect that laws on gift cards will only impact big business, the definition used in the legislation potentially creates a much broader application.

A gift card is defined to mean ‘an article that is commonly known to be a gift card or gift voucher, whether in physical or electronic form and is redeemable for goods or services.’

While this definition is quite broad and uncertain, future clarification is expected to be provided through regulations.* In the meantime, parliament has provided the following comments in relation to interpreting gift card:

“Gift cards may be redeemable in a single store or across multiple different businesses. They are generally defined with reference to a dollar amount or as being redeemable for a specific good or service and cannot have additional value added to them after they have been supplied. Gift cards are also generally not redeemable for cash beyond a minimal amount in change.”

As these provisions have a broad application, you should consider carefully whether they apply to you or your business.  It is not necessary for a card to be purchased and given to someone else – a card used by the purchaser can still be a gift card.   It is possible that ‘gift card or voucher’ will apply to most pre-paid services such as pre‑purchased passes for entry to a venue, or provision of services such as classes at a gym.

The new laws

The most significant change is that gift cards must now have a minimum expiry period of three years.

The expiry information must be prominently displayed on the card itself.  This can be either the expiry date itself, or the supply date and a statement about the period of validity.  Even where a gift card has no expiry date, this must be displayed on the card or voucher.

The new laws additionally prohibit charging of certain fees after the card is supplied.  Again this provision is drafted broadly and currently forbids all post-supply fees except those prescribed by the regulations.

The draft regulations currently allow the following fees or charges:

  1. for making a booking;
  2. for disputing a transaction;
  3. for exchanging currencies;
  4. for replacing a stolen, lost or damaged card; and
  5. payment surcharges.

While this is only a draft list, it seems parliament only intends to allow administrative fees. Monthly fees or other fees that are deducted automatically without explicit communication of the request or demand are prohibited.

Final thoughts

Business owners will not know exactly what they need to do to prepare for these new laws until the regulations are finalised and registered, which should be prior to 1 November 2019.  However, it will be worthwhile considering how this requirement might potentially change you business and what administrative changes might be required, so that you are ready to comply once the laws come into force.  In many instances the changes required for businesses may be minor.  The new laws will apply to all gift cards issues on or after 1 November 2019.

A failure to comply with these new laws carries significant financial penalties.  In the case of a corporation it could be up to $30,000, while individuals face penalties of up to $6,000.

If you have any doubt about your compliance obligations, or whether these new laws will apply to you, please do not hesitate to contact our commercial team on 07 4036 9700.

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