Changes to gift vouchers

Posted on Oct 28, 2019 by Sam Lewis   |   Categories: Commercial & Business Law

Traditionally, it has been permissible under Australian Consumer Law for gift card purveyors to place relatively short expiry periods on gift cards from the time of purchase.

Vendor’s sell around 34 million gift cards to Australians each year, with a market value estimated at $2.5 billion. With standard expiry periods being no more than 6 to 12 months, approximately $70 million is wasted per annum because gift cards aren’t redeemed before the expiry date.

As a consequence of the unnecessary wastage and a call for change, parliament introduced the Treasury Laws Amendment (Gift Cards) Bill 2018 (‘the bill’) which was passed into law on 18 October 2018 and received Royal Assent on 25 October 2018. The bill amends the Australian Consumer Law to provide protections for gift card consumers across Australia and will be in force from 1 November 2019.

The fundamentals of the new laws (of which consumers should be aware) are as follows:

• a minimum three-year expiry period for gift cards is required from the date of purchase;
• gift cards must display expiry dates, separate documents naming an expiry date will not suffice; and
• no ‘post supply’ fees can be charged for the use of the card. These are things like an administration fee for paying with a gift card, activation fees or balance enquiry fees, that essentially reduce the value of the gift card (standard fees that would be charged regardless of payment method, for example a booking fee or a fee to reissue a lost and damaged card, are not considered ‘post supply’ fees).

A breach of the new laws can attract penalties of up to $30,000 for business or $6,000 for sole traders/individuals. The Australian Competition and Consumer Commission (ACCC) also has the ability to issue separate infringement notices. Each notice is 55 penalty units for businesses and 11 units for sole traders/individuals (being $11,500 and $2,420 respectively).

For those trading in New South Wales, the Fair Trading Act 1987 has already been amended to require that most gift cards sold on or after 31 March 2018 have a 3 year validity period.