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Gift Card Reforms

Changes to the Fair Trading Act (NSW) 1987 will introduce a mandatory 3-year minimum expiry period for most gift cards and vouchers sold to NSW customers (in-store and online). All Australian businesses therefore need to assess whether these reforms impact on them.

There will also be a ban on applying post-purchase fees. These changes to the law start on 31 March 2018.

What you need to know
  • It applies to gift vouchers and gift cards (see below table for Exclusions);
  • The reforms do not apply to gift cards and vouchers purchased before 31 March 2018;
  • It is a mandatory minimum expiry period of 3 years beginning from the date a gift card is sold to a consumer (issue date);
  • There is a ban on charging any post-purchase fee associated with redeeming the card/voucher that would reduce its value;
  • The new law does apply to small businesses; and
  • Reform applies to gift cards sold to a consumer who is in NSW at the time of sale or sold to a consumer who provides a NSW address in connection with the sale.

A breach of the new laws could attract a penalty infringement notice of $550 and result in a maximum penalty of $5,500.

Transition Period

Fair Trading acknowledges that it may not be practical for a business to amend the labelling of all existing stock of cards and card packaging. The existing stock of cards means cards and packaging that were already in stock, or printed and awaiting distribution before 31 March 2018.

During the transition period, businesses can continue to sell their existing stock of gift cards and card packaging which are labelled with shorter expiry dates if they take actions to inform consumers about the new laws. These cards must be honoured for at least three years despite their non-compliant labelling.

Excluded Cards

Specific gift cards or vouchers are excluded from complying with the new laws.

  • A gift card or voucher that is given by a business for free to a consumer.
  • A gift card or voucher exchanged for goods returned to the supplier of the goods.
  • Prepaid cards for phone credit or internet access
  • ATM cards, debit cards, credit cards or charge cards
  • Gift cards supplied as part of a customer loyalty or employee rewards program
  • A gift card or voucher supplied as part of a temporary marketing promotion as a bonus to the purchase of a good or service
  • A gift card or voucher sold for a particular good or service that is below the market value of the good or service (genuine discount)
  • A gift card or voucher sold or donated for use in a fundraising appeal, including to a charity or not for profit organisation
  • A reloadable card that used EFTPOS, Visa or Mastercard or a similar electronic payment system. This is temporarily excluded only to those sold prior to 1 October 2018.
  • A gift card or voucher for a good or service available for a limited time where the card or voucher expires at the end of that period (for example, entry to a concert or museum exhibition).

NSW Fair Trading have created a number of resources to inform customers and staff of the changes. These are available on their website here.

Want to know more? Contact Naomi Menon – Head of Compliance and Operations, AFTA at naomi@afta.com.au