New Commonwealth laws regarding gift cards came into effect on 1 November 2019 by way of amendments to the Australian Consumer Law (ACL).
The relevant provisions provide that:
- gift cards must have a minimum three year expiry period;
- information about the expiry of the gift card must be displayed prominently on the card itself; and
- terms cannot allow certain post-supply fees to be charged.
Prior to these amendments, Australia did not have a uniform national law requiring minimum expiry dates on gift cards although it was estimated that the losses from unredeemed gift cards due to expiry dates amounted to $70 million annually.
The Explanatory Memorandum stated that:
the differences in expiry dates across the economy means that there are no reliable ‘rules of thumb’ for consumers in determining how long their gift cards may be valid for, leading to consumer complacency, confusion and ultimately, disappointment and financial loss when gift cards expire.
In addition, certain post-supply fees applicable to gift cards had the effect of eroding the balance on a gift card over time and operate as a de facto expiry date.
Gift card issuers, on the other hand, used expiry dates to avoid the indefinite build-up of undeclared liabilities and running costs (i.e. including record keeping, data management and data integrity costs).
Therefore, the new law is aimed at:
- ensuring that consumers have a reasonable period of time to use the gift cards;
- providing businesses with certainty through a nationally consistent gift card expiry regulation; and
- continuing to ensure that there is a viable gift card market that meets the needs of consumers.
As noted above, the primary responsibilities of gift card issuers include ensuring that:
- their gift cards are valid for at least 3 years;
- the expiry dates are clearly shown on the gift cards; and
- no post-supply fees are charged to the consumers.
The requirement for the expiry date to be prominently displayed on the gift card includes expressly stating ‘no expiry date’ when there is no expiry date.
In addition, the prohibited post-supply charges do not include fees or charges:
- for making a booking;
- for exchanging currencies;
- relating to the reissue of a gift card that has been lost, stolen or damaged; or
- that are payment surcharges.
A contravention of any of these obligations may result in a pecuniary penalty of up to:
- $30,000 if the contravening card issuer is a body corporate; and
- $6,000 if the contravening card issuer is not a body corporate.
There are certain exceptions set out under the Competition and Consumer Regulations 2010 (Regulations). For example, the new gift card regime does not apply to gift cards that are:
- redeemable in relation to electricity, gas and/or telecommunication services;
- being supplied by a person as second-hand goods; and
- supplied to certain government agencies or entities specified under the Regulations.
Furthermore, the minimum 3-year validity requirement does not apply to gift cards that are:
- redeemable for a particular good or service that is only available for a specified period;
- supplied as a genuine discount on the market value of a good or service;
- supplied as part of a temporary marketing promotion;
- donated for a promotional purpose;
- supplied for the purposes of an employee reward scheme;
- supplied for the purposes of a customer loyalty program; or
- supplied in exchange for another gift card that expires at the same time.