11 March, 2018
Legislation commencing on 31 March 2018 will introduce new rules for businesses who issue gift cards to consumers in New South Wales.
Under the legislation, a person must not sell a gift card to a consumer in New South Wales with an expiry date that is less than three years after the date of sale of the gift card. No maximum period applies. Terms and conditions providing for an expiry date of less than three years are void, and the gift card will be deemed to have an expiry date of three years after the date of sale.
In addition, while businesses will still be able to charge an administration fee at the time the gift card is bought, any administrative charge or fee imposed after the sale of the gift card (such as an activation charge or a balance enquiry charge) will be void. This will not prevent businesses charging fees relating to costs of processing payment, such as overseas transaction fees or booking fees.
A maximum penalty of AUD 5,500 applies per breach of the new requirements.
The legislation applies to any gift card sold to a consumer in New South Wales in person or online which is redeemable for goods and services in New South Wales. It will not apply to gift cards purchased online and delivered to an address outside of New South Wales, or where the contact details provided by the consumer include an address outside New South Wales. Gift cards purchased prior to 31 March 2018 will not be affected. The following types of cards will also be exempt:
- a card or voucher provided in exchange for goods returned to the supplier;
- a prepaid card redeemable for phone credit, internet access or the like;
- a debit card, credit card, prepaid travel card or similar product supplied by a financial institution, such as a reloadable card; and
- a card supplied as part of a customer loyalty program.
NSW Fair Trading has issued transitional arrangements for businesses which have pre-printed gift cards with expiry dates of less than three years which will apply until 30 September 2018 to enable them to run down their existing stock of cards. However, NSW Fair Trading has made it clear that businesses must take steps to inform consumers that a three year expiry and no post-purchase fees apply, for instance by physically amending cards to strike out any reference to an expiry period which is less than 3 years, updating website terms and conditions and putting signage on stands where gift cards are located and/or at point of sale. Existing cards will need to be honoured for at least three years despite any non-compliant labelling.
For online sales, NSW Fair Trading expects the new minimum three year expiry date will be able to be imposed from 31 March 2018. However, if not, it will still consider whether the business has adequately notified consumers of the new expiry date before it will enforce the legislation. This could be by updating the card terms on the business's website, making them available at point of sale, and/or providing notice in an email which accompanies the provision of the online card. The transitional arrangements do not apply to the new prohibition on post-purchase administration fees.
These changes will make New South Wales out of step with other States and Territories and put pressure on other States and Territories to follow suit. There is also a question whether the Commonwealth Government should take steps to regulate this area as part of national consumer legislation to ensure a uniform approach. Even if this does not happen, it is likely businesses that operate nationwide will adopt the position in New South Wales, to the extent that they have not already done so, to avoid needing to undertake additional checks to determine whether a consumer is resident in New South Wales.
For further information, please contact:
Anne-Marie Allgrove, Partner, Baker & McKenzie
anne-marie.allgrove@bakermckenzie.com
