Buyer beware? An update on the rules that relate to the use of gift cards and what methods consumers can take to protect themselves this Christmas

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Buyer beware? An update on the rules that relate to the use of gift cards and what methods consumers can take to protect themselves this Christmas

Posted 20/12/2012 by Leah Ferris

In December 2011, the Parliamentary Secretary to the Treasurer released the Commonwealth Consumer Affairs Advisory Council (CCAAC) issues paper on Gift cards in the Australian market. The paper looks at the laws that currently apply to the gift card industry and whether these laws sufficiently protect both gift card users and purchasers. This FlagPost will update a previous post that discussed some of the issues pertaining to the use of gift cards and will examine other problems consumers may face during the festive season.

 
Submissions in response to the issues paper closed on the 2 March 2012, and on 6 July 2012, the CCAAC presented the Assistant Treasurer, David Bradbury, with its final report and recommendations. Consumer advocates , including the director of policy and campaigns at the Consumer Action Law Centre, Gerard Brody, were surprised to learn that the CCAAC ultimately recommended that no substantial changes be made to the current framework.
 
The CCAAC rejected consumer groups’ calls for a ban on expiry dates and better protection for consumers where a retailer becomes insolvent. Instead the CCAAC ‘encourages industry to develop and promote best practice principles that support consumers when engaging with these products’ and ‘encourages Australian Consumer Law (ACL) regulators to continue to explore how consumer awareness can be promoted to assist purchasers and holders of gift card products’.
 
The Australian Retailers Association is supportive of the CCAAC’s findings. ARA Executive Director Russell Zimmerman said ‘there was no reason for changes to the current gift card regulations given the report pointed to extra pressure on business if there was any move towards ministerial regulation of a currently effective system’. However, with Australians spending over $1.5 billion on gift cards each year, it remains to be seen whether the CCAAC has taken the right approach.
 
Gift cards aren’t the only items posing problems for consumers. Other issues include when goods can be refunded, what can be done about faulty/unsafe goods, and the use of extended warranties. In a recent media release, David Bradbury suggested the following five tips for consumers to avoid losing money this Christmas:
  1. Keep your receipts
  2. Check for unsafe goods
  3. Avoid scams
  4. Read gift card terms and 
  5. Think carefully before purchasing that extended warranty. 
Last Christmas, Choice alerted consumers to the need to know what rights they have under the Australian Consumer Law (ACL). The ACL is a national set of consumer laws which sets out what rights apply to all consumers when purchasing good and services within Australia. It came into effect on the 1 January 2011 and provides for a number of consumer guarantees:
  • goods must be of acceptable quality, be fit for the purpose they are intended and match the description given
  • repair facilities and spare parts must be available for a reasonable time, and any warranty made by a supplier or manufacturer must be complied with and
  • services must be delivered with due care and skill, and completed within a reasonable time if no set timeframe is agreed.
In particular, the ACL clarifies when a consumer can obtain a remedy. Where a good is deemed faulty or does not work as described, a consumer is within their rights to approach the retailer and request that the defect be remedied, which can either be a refund, replacement or repair depending on the nature of the defect. This is the case even where the retailer has stated that no refunds are available after a certain period, or with respect to certain goods. However, where the consumer has simply changed their mind (or wishes to return an unwanted gift!), they will not be entitled to a remedy under the ACL.
 
Another issue that is addressed under the ACL is the use of extended warranties. Often retailers will offer a consumer the option of purchasing an extended warranty, which acts in extending the warrant provided by the manufacturer. Importantly, warranties operate on top of the protections offered under the ACL. Therefore, a retailer/manufacturer must fix a problem when a product fails to meet a consumer guarantee under the ACL, even if the consumer is not covered by a warranty.
 
The ACCC has recognised the difficulties faced by consumers in understanding their rights under the ACL and has introduced a free mobile app, which is aimed at providing instant advice to consumers while they are shopping.
 
Upon its release, ACCC Deputy Chair Delia Rickard stated “simple disputes over returns, refunds or replacements often leave shoppers confused about their rights. The ACCCShopper app will help to take the worry out of Christmas shopping.”
 
The ACCCShopper app will:
  • provide answers to commonly asked questions about refunds, returns, warranties, and laybuys
  • allow consumers to store photographs of receipts as proof of purchase on their device at the point of sale
  • let consumers set reminders for when lay-buys are due and the expiry date for warranties and gift vouchers via the ‘My items’ feature and
  • explain common labelling terms like ‘Made in Australia’ and ‘Extra Virgin olive oil’.
The app is available for Apple and Android smart phones and tablets and can be downloaded from the Apple App Store and the Android Market by searching for ‘ACCCShopper’.


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Flagpost is a blog on current issues of interest to members of the Australian Parliament


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