‘Tis the Season for businesses to adopt innovative ways to sell their goods and services in anticipation of attracting the Festive Season consumer. That’s why we have put together some essential information about gift cards to help your business comply with the Australian Consumer Law during the Silly Season.
NEW GIFT CARD RULES
If your business issues gift cards then the recent changes to the Australian Consumer Law, which apply to all gift cards supplied after 1 November 2019, are relevant to you.
Prior to these reforms there was no nationally consistent regulatory strategy for gift cards. This resulted in significant confusion in the market and left business owners feeling like the Grinch who ruined Christmas after telling customers that their gift cards have expired.
As a business operator, there are three primary responsibilities arising from these reforms you should be aware of:
Minimum Three-Year Validity
The law requires that gift cards have a minimum expiry period of three years, which begins from the date the gift card is sold to the consumer. Keep in mind that this is merely the minimum requirement; businesses can choose whether to apply a longer expiry period that exceeds this mandatory period.
This reform applies to all gift cards sold after 1 November 2019, unless specifically excluded by the legislation. For example, the three-year requirement does not apply to gift cards that are:
- capable of being reloaded;
- available for a limited time (e.g. entry into a particular event being hosted for a limited time);
- supplied as part of a temporary marketing promotion (e.g. a food voucher valid for three months which is sent to a consumer as a ‘free bonus’ with an order);
- donated for promotional purposes (e.g. a store has a marketing promotion where each person that enters the store receives a $50 gift card redeemable for only the next three days)
- supplied at a genuine discount (e.g. a $60 card for a service worth $120)
- given as a ‘bonus’ in connection with the purchase of a good or service for use in the same business (e.g. as part of customer loyalty program)
Display of Expiry Dates
In the interests of providing greater clarity to consumers, information about the expiry of a gift card must be displayed prominently on the card and not lost in the fine print.
Post-Purchase Fees Banned
Once a gift card has been issued to a consumer charging any ‘post supply’ fees that reduce the value of the gift card is prohibited. This means you cannot charge the recipient of the card for activation fees, account keeping fees or balance enquiry fees.
However, this reform does not affect the ability for a business to charge fees that cover the cost of processing a payment which may include booking fees, overseas transaction or surcharge fees.
Keep clear of the Naughty List to avoid corporate fines of up to $30,000.00.
Expiry periods and associated fees applicable at the time of the sale of gift cards up to 1 November 2019 continue to apply. The new requirements apply to gift cards sold from 1 November 2019 even if the terms and conditions on that gift card do not comply with the reforms.
Don’t be a Rebel Without a Claus. Contact us to ensure your gift card policy is compliant with the ACL this Festive Season. Happy Giving!