Citing concerns that consumers were losing benefits because of expiry dates and administrative fees, the New South Wales government has introduced new laws concerning gift cards. The Fair Trading Amendment (Ticket Scalping and Gift Cards) Bill 2017 was passed by NSW Parliament late last year, with the rules commencing from 31 March 2018.
The new laws provide for:
- A mandatory three-year minimum term on gift cards;
- The prohibition of any charges or fees applied after the sale of a gift card which would reduce the value of the gift card,
and will void any terms or conditions to the contrary.
The stated aim of this law is to provide a fairer deal on gift cards to consumers. A 2012 report from the Commonwealth Consumer Affairs Advisory Council (CCAAC) found that between 3 and 8 percent of gift cards expired with unused funds still on them, and NSW residents were losing $60 million per year.
The law applies to gift cards, in hard copy or electronic form, that are both:
- Sold to a consumer in New South Wales; and
- Redeemable in New South Wales.
Despite these limitations, the law is likely to change the practices of large retailers nationally, or require them to carefully consider the legality of any alternative practices they might adopt in other States if gift cards are redeemable nationally.
Penalties can include fines of up to $5,500 per contravention, which can quickly multiply as each non-compliant gift card is sold.
Exceptions to the new laws include:
- Cards or vouchers supplied in substitution for returned goods;
- Prepaid cards or vouchers redeemable for phone credit, internet access, or similar;
- Debit cards, credit cards, prepaid travel cards or similar products supplied by financial institutions; and
- Cards or vouchers supplied as part of a customer loyalty program.
We recommend that businesses take prompt action to review the terms of their gift cards to ensure that they comply with the new NSW gift card laws. It is unclear at this stage whether any other States may be looking to introduce similar laws, but consumer advocacy group Choice has moved to encourage all other states and territories to follow the lead of NSW.
This article was written by, Luke Dale, Partner, Daniel Kiley, Senior Associate and Megan Peake, Law Clerk.