From 1 November 2019 new laws will come into force that place additional restrictions on gift cards that business can sell or supply to their customers. It is crucial that business owners understand their obligations under these new laws and have the opportunity to adjust any gift card systems that they have in place before the new laws take effect.
The Treasury Laws Amendment (Gift Cards) Act 2018 makes amendments to the Australian Consumer Law (ACL) in Schedule 2 of the Competition and Consumer Act 2010 (Cth). These changes unify the law relating to gift cards across all states and territories, with these requirements being already in place in South Australia and NSW.
A gift card is defined quite narrowly as something that acts as a voucher that is redeemable by itself for goods or services – under the associated regulations, credit/debit cards, loyalty cards, and other discount vouchers will not be affected.
Subject to some exceptions, the changes are as follows:
(a) Gift cards must now have a minimum expiry period of three years;
(b) The date that a gift card will expire must be physically displayed on the card (i.e. not in a separate terms and conditions document); and
(c) Post purchase fees (such as for activation, account keeping or inactivity fees, or any other fee that would effectively reduce the face value of the gift card) are banned.
Failing to observe the above requirements and selling non-compliant gift cards may result in fines of $6,000 for an unincorporated trader and a steep $30,000 if the business is run by a company. The Australian Competition and Consumer Commission may also launch legal action under the ACL to prevent anyone from supplying non-complying gift cards, and otherwise may serve infringement notices.
With the strong adverse consequences for businesses failing to meet the requirements of the new laws, businesses must be prepared to take on compliance costs by, among other things:
(a) changing their IT systems to extend expiry dates of gift cards in circulation;
(b) reprinting any existing cards in their stock;
(c) retraining of staff to sell and use gift cards; and
(d) seeking legal advice to ensure that any updated gift card scheme is compliant with the updated provisions of the ACL.