As we discussed in an alert earlier this year, the New South Wales Government introduced new laws on 31 March 2018 to provide greater consumer protections to users of gift cards. The rules provide for a three-year minimum term on gift cards, and prohibit any charges or fees applied after the sale of a gift card which would reduce the value of the gift card.
In keeping with promises made in the lead-up to the March State election, the new South Australian Government has recently introduced the Fair Trading (Gift Cards) Amendment Bill 2018 to Parliament, in an attempt to include a similar set of provisions in the South Australian Fair Trading Act 1987.
The proposed new laws provide for:
- A mandatory three-year minimum term on gift cards; and
- 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.
Where the expiry date of a gift card is rendered void as a result of the above, it is instead taken to be 3 years after the date of sale of the card.
Exceptions to the proposed provisions include:
- Gift cards sold to consumers prior to the commencement of the Bill;
- Gift cards sold to consumers online or by phone where the gift card is delivered to an address outside South Australia, or where the contact details of the consumer in connection with the sale of the gift card include a residential address outside South Australia; or
- Other exceptions as prescribed by regulations imposed by the Governor.
For the purposes of this Bill, gift cards are taken to mean any card or voucher, whether in physical or electronic form, that is redeemable for goods or services in South Australia.
Purpose of the Bill
The stated purpose of this Bill is to provide certainty to consumers and businesses by establishing a minimum expiry date on gift cards in South Australia. Outside of New South Wales, Australian consumer laws do not currently prescribe a minimum expiry, resulting in varied, and often short, expiration dates on many gift cards.
According to consumer advocacy group Choice, Australians spend an estimated $2.5 billion a year on gift cards, with as much as $200 million of that going unredeemed and back to the respective businesses.
Penalties can include fines of up to $5,000 per contravention of the proposed laws, which can quickly accumulate with the sale of each non-compliant gift card.
While similar laws are yet apply uniformly across Australia, some businesses have already begun amending their gift card terms nationally. For example, the Woolworths Group, including Woolworths Supermarkets, Big W, Dan Murphy’s, BWS, Cellarmasters and Caltex Woolworths Petrol, have recently removed the expiry dates from their gift card terms altogether.
As relevant laws are already active in New South Wales, any businesses offering gift cards in that State will already need to be compliant with applicable requirements.
As the South Australian Bill demonstrates, similar changes are likely to be made in other jurisdictions soon, and we accordingly recommend that businesses attend to the review and evaluation of the terms of their gifts cards, to ensure compliance with the laws if and when they are enacted.
This article was written by Luke Dale, Partner, Daniel Kiley, Senior Associate, and Jonothan Cottingham-Place, Law Clerk.
P: +61 8 8205 0580