New gift card laws

Changes to gift card laws came into effect late in 2019 that impacted the issue and use of gift cards.  Just in time for Christmas shopping, the changes mean fewer wasted gift cards expiring before customers have a chance to use them.

From 1 November 2019, gift card laws meant that all gift cards must comply with the following rules:

  1. gift cards must be redeemable for at least 3 years;
  2. the date of expiry must be prominently displayed on the gift card (or, if applicable, words to the effect of “no expiry date” must be included);
  3. most post-purchase fees or charges cannot be required in respect of a gift card; and
  4. a term or condition of a gift card will be void if it:
    1. allows or requires a non-authorised post-purchase fee or charge; or
    2. reduces the period for which a gift card is redeemable to earlier than 3 years from the date of issue.

Restrictions on post-purchase fees includes a restriction on charges such as activation fees, account keeping fees and balance enquiry fees. Standard business fees, such as those charged in respect of payment processing costs and not solely in relation to gift cards, are not restricted.

There are certain exclusions in terms of the types of gift cards that must comply with the new laws. For example, the three-year expiry period does not apply to gift cards that can be reloaded, that are issued for temporary marketing purposes or issued as a bonus under customer loyalty programs. However, all standard gift cards and vouchers will otherwise be required to comply, with strict penalties applicable for both companies and individuals in the event of non-compliance.

Consumers will now be able to enjoy more certainty when purchasing and using gift cards, as these new requirements are applicable to all gift cards and vouchers supplied from 1 November 2019 onwards, regardless of whether or not the gift card appears to comply. Older gift cards will have the same expiry date and post-purchase fees applicable at the time of purchase.

Businesses offering gift cards should take note to update their systems and terms and conditions so as to be compliant with the new laws.

These amendments were made to the Competition and Consumer Act 2010, which provides various protections for Australian consumers for the purpose of promoting fair trading and competition.