Time for a Spring cleaning! Why not take this time to review your gift card process to ensure you are optimizing the benefits of this marketing tool while minimizing your risks.
REGULATION OF GIFT CARDS
Gift cards are regulated in most provinces of Canada. Consistent across many provinces’ legislation is that:
- gift cards cannot have an expiry date; and
- suppliers must disclose all terms and conditions that they impose on the card.
EXCEPTIONS TO EXPIRY DATE PROHIBITION
Some provinces provide exceptions to the “expiry date” prohibition. The exceptions include gift cards issued or sold:
- for a specific good or service;
- for a charitable purpose;
- for a marketing, advertising or promotional purpose;
- at a discount; and/or
- with the holder not providing anything of value when the card is issued.
Whether a supplier may charge a fee in relation to the gift card varies across the provinces. Where fees are permitted, they generally include fees payable for the purpose of activating the card, replacing a lost or stolen card, or customizing a card.
MULTIPLE SELLER GIFT CARDS
Some provinces have certain rules pertaining to gift cards that may be used at more than one unaffiliated seller, such as a shopping mall gift card. In some provinces, the rules may permit a supplier to charge a dormancy fee under certain conditions and provided that certain information is indicated on the card.
Gift card suppliers must also be aware of the rules regarding false and misleading advertising found in Canada’s Competition Act.