NSW gift card reforms: the gift that keeps on giving… for 3 years

From 31 March 2018, gift cards and vouchers purchased by consumers in NSW must have a minimum expiry date of 3 years from the date of purchase.

The NSW State Government has introduced new reforms to the Fair Trading Act 1987 (NSW) (the act) by amending the mandatory minimum expiry period from 12 months to 3 years on most gift cards and gift vouchers sold to consumers in NSW.

Section 58N of the Act now provides:

58N Prohibition on gift card expiry dates of less than 3 years

(1)       A person must not sell to a consumer in New South Wales a gift card with an expiry date that is earlier than 3 years after the date of sale of the gift card.

Maximum penalty: 50 penalty units.

(2)       A person who sells a gift card to a consumer in New South Wales, or who has agreed with the seller to redeem that gift card, must not impose any administrative charge or fee that reduces the redeemable value of the gift card after the sale of the gift card.

Maximum penalty: 50 penalty units.

(3)       A term or condition of a gift card sold to a consumer in New South Wales is void to the extent that it would make the sale of the gift card, or the imposition of a charge or fee, an offence under this section.

(4)       If the expiry date of a gift card is void because of subsection (3), the expiry date is taken to be 3 years after the date of sale of the gift card.

A “consumer” for the purposes of the Act has the same meaning as in section 3 of the Australian
Consumer Law (NSW) which provides there is a presumption a person is a “consumer” if they:

1. acquire goods or services the price of which is $40,000.00 or less; or
2. acquire goods or services of a kind ordinarily acquired for personal, domestic or household use or consumption; or
3. acquire a vehicle or trailer (at any price) for use principally in the transport of goods on public road, and
4. in relation to the acquisition of goods, do not acquire, or hold themselves out as acquiring, the goods for the purpose of resupply, using them up or transforming them, in trade or commerce, in the course of a process of production or manufacture, or repairing or treating other goods as fixtures on land.

The reforms extend to consumers outside of NSW provided the gift card or voucher was either:

1. purchased in a store located in NSW; or
2. purchased online or by phone from a business with a NSW contact or delivery address.

Gift cards and vouchers purchased prior to 31 March 2018 will have the same expiry date and terms and conditions that applied to gift cards at the time of purchase.

Ban on post-purchase administration fees

Under the new reforms, businesses are now being banned from applying post-purchase administration fees to gift cards and vouchers which reduce the redeemable value of the gift card.

Transition period

Businesses have been provided with a transition period between 31 March 2018 to 30 September 2018 during which they may continue to sell their old gift cards however, the gift cards sold during this period are still captured by the new reforms. If a business sells a non-compliant gift card during the transition period it must notify the consumer purchasing the gift card of the new 3 year mandatory expiry period by manually changing the expiry date on the gift card, updating its gift card terms and conditions on its website, placing signage in-store, providing consumers with an information leaflet or noting it on the receipt.

The transition period does not apply to digital or e-gift cards which must show the new 3 year minimum expiry period effective from 31 March 2018.

Exceptions

The 3-year minimum expiry period does not extend to the following gift cards or vouchers:

1. gift cards issued for returned goods;
2. gift cards issued as part of customer loyalty or employee rewards programs;
3. gift cards given for free to consumers or as part of a marketing promotion or a bonus to another purchase, including prizes in a trade promotion;
4. gift cards sold for below market value of the goods/services or gift cards donated for a fundraising appeal;
5. prepaid phone and internet cards; and
6. debit/credit/ATM cards or reloadable cards that use EFTPOS, Visa, Mastercard, etc.

For further information and advice please contact JHK Legal on 02) 8239 9600. The above article is not intended to be a substitute for legal advice.

Kathleen Faulkner – Senior Associate

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