While not always considered the most exciting presents to unwrap, these small, easy-to-purchase items were rated among the top Christmas presents
preferred by Australians last year. Yet for some recipients gift cards have proved less useful than the traditional pair of socks, leading to a review as to whether the best things really do come in small packages.
The Commonwealth Consumer Affairs Advisory Council (CCAAC) has recently released its paper “Gift Cards in the Australian Market”
. It comes as a response to concerns raised by Paul Lucas MP who, along with consumer groups such as Choice
, has called for a nationwide scheme to regulate the use of gift cards. 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.
The paper also discusses a number of difficulties encountered by gift card users. These include:
- Expiry dates: the majority of gift cards have a time limit within which they must be used. This is normally between 12 and 24 months. Bunning’s, Toys “R” Us and EB Games are some of the few companies that offer a card with no expiry date. Special care must be taken when noting the expiry date, as some cards only state when the card was issued and then set out the length of the time period within the terms and conditions.
- Change not provided: some retailers will not give cash for the amount remaining on the card, though you may have the option of using the card again. If the remaining value is not redeemed by the time the card expires, the retailer will pocket the change.
- Where the retailer becomes insolvent: when this occurs, gift card holders will become unsecured creditors and must wait until the company is wound up and priority payments made, before receiving anything. In the case of Borders and Angus & Robertson, gift card holders were offered the option of redeeming their card provided they spent twice the value of the card.
In Australia, the same laws that apply to all goods and services also apply to gift cards. These include the laws relating to consumer rights (including misleading and deceptive conduct, fraud, unfair contract terms and unconscionable conduct) set out in the Australian Consumer Law
(ACL) and the Australian Securities and Investments Commission Act 2001 (Cth)
(ASIC Act). The ACL is the new national framework for consumer protection. It applies to gift cards that can only be used at a single retailer (such as Dymocks). Gift cards that can be used at multiple retailers (such as Westfield Shopping Centre) are governed by the ASIC Act. In addition, these cards are exempted from certain disclosure obligations under the Corporations Act 2001 (Cth)
. For example, if they have an expiry date the exemption will only apply if the date is set out clearly on the card. If the retailer becomes insolvent, the rights of a gift card holder as an unsecured creditor are also covered by this Act. This means that there are already laws in place to protect people who purchase gift cards—but are they sufficient? And do they actually extend to the person who receives the gift card?
In her article, ‘Gift Vouchers and Expiry Dates: When the Gift Stops Giving
’, Nicky Jones argues that it is unfair to gift card holders that there are currently no express rules in Australia addressing expiry dates on gift vouchers, and that those who wish to pursue legal action may be required to do so through the gift card purchaser. How does a much loved niece or nephew explain to an aging aunt that they failed to use the gift card which was their last birthday present and now want her to take action against the person she purchased it from?
While the CCAAC paper addresses these problems, it also acknowledges the dilemmas faced by retailers in ensuring that those who actually use the gift cards are made aware of the relevant terms and conditions. This is further complicated where the retailer who sells the gift card is not the same as the retailer to whom the gift card applies. How, for example, does Australia Post
which sells gift cards for retailers such as Sportsgirl make the buyer aware that there might be important conditions which apply to the use of the gift card? And should it have to? Another issue the CCAAC paper looks at is the difficulty experienced by retailers when accounting for cards with no expiry date, as retailers have no way of predicting how many people will actually use their cards, or which financial period they will use them in.
In looking at what changes could be made to the current laws, thought must be given to what the situation is in other countries. Both the United States and certain Canadian provinces have enacted laws specifically targeted at the gift card industry. These new laws have been aimed at restricting or banning service fees and expiry dates, allowing people to receive cash back on balances below a certain amount and ensuring that terms and conditions are adequately disclosed. A notable change is that all gift cards sold in the US must have a minimum duration of 5 years from the date funds are loaded before they can expire. Whether or not these laws aimed specifically at the gift card industry could be appropriately introduced into Australia’s broad consumer protection framework requires some consideration.
With Australians spending over $1.5 billion on gift cards each year, the CCAAC is looking closely at whether any changes need to be made. Anyone who would like to contribute to the discussion on this issue is certainly encouraged to do so by 5:00pm on Friday, 2 March 2012 through the official website