Since the last issue of the Osler Advertising and Marketing Review, there have been significant developments in gift card regulation in Canada in the provinces of Ontario, Alberta, New Brunswick and British Columbia. To access our previous gift card legislation update, please click here.
The Ontario gift card regulations (O. Reg.17/05) made under the Consumer Protection Act, 2002 were recently amended by O. Reg. 202/08. The amendments address “open loop” gift cards which entitle consumers to redeem cards at multiple unaffiliated stores like shopping malls. When the gift card regulations came into effect on October 1, 2007 open loop gift cards were exempt for a period of 270 days to give the government time to explore regulatory options. As of September 1, 2008 a supplier cannot issue an open loop gift card valued at less than the amount the consumer paid for it, less $1.50. Furthermore, no fees are permitted unless they relate to card replacement, card customization or dormancy. In some circumstances, a supplier may charge a maximum monthly dormancy fee. Additional disclosure requirements apply with respect to dormancy fees for open loop gift cards.
On November 1, 2008 Alberta’s new gift card regulation (Alta. Reg. 146/2008) made under the Fair Trading Act (the Act) will come into force. The regulation applies to valid “prepaid purchase cards,” including re-loadable cards, gift cards and gift certificates, purchased before, on or after November 1, 2008.
Unfair Practices and Required Disclosure
The regulation prohibits expiry dates on prepaid purchase cards; the sale of prepaid purchase cards with such dates constitutes an unfair practice under the Act. Additionally, it is an unfair practice when a supplier does not accept a gift card as partial payment on a purchase or when a supplier withholds any portion of a card’s unused remaining balance after use. The regulation also specifies that it is an unfair practice to charge any fees, including dormancy or inactivity charges, unless the fees relate to card replacement or customization. However, the regulation does allow a supplier to charge a one-time activation fee at the time of purchase under certain conditions. The regulation further creates specific disclosure requirements for prepaid purchase cards and requires that the supplier provide a receipt as proof of purchase when the card is issued.
Cancellation and Offences
The Act stipulates that when a supplier’s actions constitute an unfair practice, a consumer may cancel a transaction at no cost or penalty to the consumer, provided that notice is given to the supplier within one year of the unfair practice. The consumer is entitled to any remedy that is available at law, including damages. Furthermore, individuals who contravene the Act and regulation could be liable upon conviction to fines and/or imprisonment.
Bill 69, the Gift Cards Act (the Act), was introduced in the second session of the 56th Legislative Assembly on May 27, 2008 and quickly received Royal Assent on June 18, 2008. Upon the introduction of the bill, the opposition withdrew Bill 58, the Gift Card Expiry Act, which had received first reading on May 14, 2008. The Act is fairly consistent with gift card legislation introduced elsewhere in Canada. It applies to “gift cards,” including gift certificates, purchased on or after June 18, 2008 unless otherwise prescribed. To date, no regulations under Bill 69 have been proposed.
Prohibitions and Required Disclosure
Under the Act, expiry dates on gift cards are prohibited and void, except as provided in the regulations. Additionally, a supplier may not sell a card valued at less than the amount the consumer paid for it, nor may any fees be charged (unless prescribed). The Act provides for certain refund obligations where a prohibited fee has been charged. The Act also prescribes that certain disclosure requirements must be met when a gift card is issued. The supplier must also disclose how a consumer can obtain information about the card, such as any remaining balance.
Individuals in contravention of the Act will be subject to a fine.
Bill 17, the Public Safety and Solicitor General (Gift Card Certainty) Statutes Amendment Act, 2008 received Royal Assent on May 1, 2008. However, the sections of the Bill which add Part 4.1-Prepaid Purchase Cards to the Business Practices and Consumer Protection Act have not yet been proclaimed in force. For more information on this statute, click here.