Mandatory minimum 3 year term for gift cards set to become national

Earlier this year, the NSW Government enacted legislation requiring gift cards to have a minimum expiry date of three years from the date of supply. You can read more about these changes here.

As predicted, the Federal Government has now followed suit, passing new laws making the three year minimum expiry mandatory across Australia. The purpose of the new laws is to provide national consistency in respect of gift card regulation (eliminating the complexities faced with differing State legislation), provide certainty for businesses and allow consumers a reasonable timeframe to redeem gift cards.

 

How will these new laws affect my business?

The new laws, set to commence on 1 November 2019, amend the Australian Competition and Consumer Act 2010 to:

•  mandate minimum three year expiry dates for gift cards;

•  require gift cards to display expiry dates; and

•  ban post-purchase fees on gift cards (i.e. activation, account or balance checking fees).

Items commonly known as a ‘gift card’ or ‘gift voucher’ will be captured by the new laws. Items such as transport tickets, credit cards, travel cards and digital currency will not be regarded as gift cards for the purposes of the new laws.

 

What exemptions are likely to apply to the new laws?

Similar to the NSW exemptions, it is proposed that the new laws will not apply to:

•  reloadable prepaid gift cards;

•  vouchers for utility services (e.g. gas, electricity, telecommunications);

•  gift cards supplied as second hand goods;

•  cards or vouchers supplied as part of a temporary marketing promotion, donated to select charities, donated for a promotional purpose or part of an employee reward scheme; and

•  cards or vouchers that are redeemable for a good or service available for a limited time only or sold at a genuine discount on the market value of the good or service.

There will be additional exemptions in relation to post-purchase fees. Proposed exemptions to post-purchase fees include fees for making a booking; foreign exchange fees or fees for replacing a lost or stolen gift card.

 

Preparing for the new laws

A commencement date of 1 November 2019 provides businesses with significant time to prepare for the changes. The Treasury has released draft Regulations which set out the exemptions to the new laws (mentioned above) and these Regulations will be finalised before commencement of the new laws. Existing businesses who operate across multiple States including NSW may already have processes in place to comply with the NSW regime and these new national laws may require little change to current business practices. However businesses who operate in State jurisdictions other than NSW and have not considered minimum expiry dates for their gift cards should start thinking about the impact of these new national laws on its business, such as whether their systems may require updating to comply with the new regime.

 

Stay tuned. We will follow with further updates once the Regulations are finalised.

 

This article is provided by way of general information only and is not legal advice. Always obtain your own independent legal advice tailored to your business’ particular circumstances before making decisions relating to the legal issues referred to above. In this regard, we’re here to help.