It has been estimated that Australians purchase about $1.5 billion worth of gift cards annually.
Despite their popularity, gift cards have increasingly been the subject of complaints in recent years. Common consumer concerns relate to:
· almost all gift cards Choice looked at expired after only one year;
· of the survey participants, three out of four reported buying or receiving a gift card in the previous year but more than half of those reported that their card expired before they were able to use its full value);
· at the time of the survey only one retailer, Bunnings, offered a gift card with no expiry date);
· what happens to gift cards when the issuing business ceases to trade, and
· who should pocket the interest that accumulates on unredeemed gift cards.
It is also often the case that, if the full amount of a gift card is not used, consumers will not receive cash change for the remaining balance, leading to concerns about card issuers reaping windfall profits.
In addition, the terms and conditions for gift cards vary significantly between retailers, and consumers are not always provided with a copy of these prior to purchase.
Currently, gift cards are largely unregulated in Australia
In June 2011, the then Ministerial Council on Consumer Affairs (‘MCCA’), now the Legislative and Governance Forum on Consumer Affairs (CAF), met and, following calls by Queensland’s then Attorney-General, the Hon P Lucas MP, and spurred by community concerns (raised by consumer groups such as Choice), agreed to the Commonwealth and Queensland Governments leading work to explore and develop options to better protect gift card consumers.
The Queensland Parliamentary Library, in a Research Brief published in December 2011 (Gift cards on the national agenda: Queensland’s push to regulate the “gift that can stop giving”), considered the popularity of gift cards, the various issues attaching to them, how they are currently regulated in Queensland North America such as a ban on fees and charges, clear disclosure requirements and a five year limit on expiry dates (or even a total ban).
In comparison, the absence of specific regulation of gift cards in New Zealand appears to mirror the situation in Australia
Just shortly prior to the publication of the Queensland Parliamentary Library’s Research Brief, the Commonwealth Consumer Affairs Advisory Council (‘CCAAC’) (an expert advisory panel, which provides advice to the Parliamentary Secretary to the Treasurer on consumer policy issues) released an Issues Paper, Gift cards in the Australian market. Key issues raised in the Issues Paper were profiled by the Australian Parliamentary Library in a post on its own public blog, FlagPost (‘The gift that stops giving? Government launches new inquiry into gift cards’), published on 27 January 2012. On its website, Choice drew attention to the options open to the CCAAC, as set out in the Issues Paper (ranging along a continuum from non-regulatory responses such as consumer education and voluntary best practice terms and conditions for retailers through to regulatory responses such as mandatory product disclosure requirements and mandatory best practice terms and conditions for retailers), depending upon the thrust of the submissions received (see also the Issues Paper itself, especially at pp iii and 15).
Among the 62 responses generated by the Issues Paper, which closed on 2 March 2012, were submissions from:
· Dr Nicky Jones, from the School of Law at the University of Southern Queensland, supporting a prohibition on gift cards bearing expiry dates, citing consumer research data from the United States and Canada which has found that about 1/3 of gift cards expired unused;
· the Queensland Law Society;
· the Shopping Centre Council of Australia; and
· the National Retail Association which restated its previously expressed position that it did not consider additional regulation of gift cards to be necessary and thought concerns about gift cards were overstated.
Choice too has addressed a submission to CCAAC, available from the Choice website and dated 3 April 2012. Interestingly, Choice took the view that there was no evidence that extending expiry dates to terms such as five years would do much to alleviate the issue of non-use, instead preferring the options of raising consumer awareness about expiry dates or extending expiry dates, albeit at a cost.
While Queensland’s former Bligh Government had announced it would consider going it alone should a national approach not be forthcoming, in what appears to be the most recent development to date, the ACT Government has announced that it is considering a $5 cash-out option for gift cards bearing a face value of $50 or less, or a 10% cash-out for cards whose face value exceeds $50, citing estimates by Choice that up to 30% of the estimated annual outlay on gift cards in Australia goes unclaimed.
In the interim, pending the outcome of the national examination of gift cards, fair trading agencies, such as the Queensland Government’s Office of Fair Trading website, continue to encourage businesses offering gift cards to:
· Provide a reasonable redemption period - at least 2 to 5 years, with the expiry date prominently marked on the card.
· Not set limits on the minimum amount a consumer must soend on a gift card in order to be able to use it.
· Offer cash change for small amounts remaining on gift card.
· Clearly indicate the stores included and excluded for shopping centre cards, or cards for groups of stores.
· Record the details of any gift cards sold - so that lost or stolen cards can be replaced.
· Customers should be able to check the remaining balances on their gift cards for free, preferably by an online method, or otherwise by a service in-store.
· Gift card purchasers should be provided with a copy of the terms and conditions, and be encouraged to pass them on to the gift card recipient. Terms and conditions should also be readily available online and in-store.
· Customers should be made aware of what will happen if the business is sold or goes into administration, receivership or liquidation. Businesses are encouraged to take steps to ensure gift cards are honoured by the new owner if a business is sold.
Key Documents
Ministerial Council on Consumer Affairs Communiqué (MCCA), Joint Communiqué, 3 June 2011, ‘Community concern with gift cards’, p 3
Commonwealth Consumer Affairs Advisory Council (CCAAC), Gift cards in the Australian market, Issues Paper, December 2011 and submissions
Renee Gastaldon, Gift cards on the national agenda: Queensland’s push to regulate the "gift that can stop giving", Research Brief, Queensland Parliamentary Library, December 2011
Ministerial Media Releases
· Hon P Lucas MP, Deputy Premier and Attorney-General, Minister for Local Government and Special Minister of State, ‘Protection for consumers who purchase gift cards on MCCA agenda’, Ministerial Media Statement, 3 June 2011. (See also the then Attorney-General’s discussion on 612 ABC Radio, ‘Queensland Attorney-General wants gift voucher reform’, 3 June 2011)
· Hon P Lucas MP, Attorney-General, Minister for Local Government and Special Minister of State, ‘Comment sought on gift card use in the Australian market’, Ministerial Media Statement, 9 December 2011
Simon Corbell MLA (Attorney-General), ‘Fairer deal for consumers on gift-cards’, Media Release, ACT Government, 16 April 2012
Articles and news clips
Nicky Jones, ‘Gift vouchers and expiry dates: when the gift stops giving’, QUT Law and Justice Journal, 2009, 9(2), pp 213-231; ‘
· Jonathan Barrett, ‘Gift vouchers’, New Zealand Law Journal, August 2008, pp 293-294
· Choice, ‘Gift card traps’, last updated 20 April 2012; ‘Time to deliver fairness on gift cards’, last updated 4 May 2012
· Dan Nancarrow, ‘Gift card expiry dates could “kill” service’, Brisbane Times, 4 June 2011
General Distribution Research Team, Research and Information Service
