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Gift cards: make sure you get it right

18 December 2023

Gift cards are popular at Christmas. To help your business avoid problems with gift cards, the Australian Competition and Consumer Commission (ACCC) explains the top issues of concern for consumers.

1. Gift card expires too early

For example, a customer buys a gift card in 2021 and tries to use it in 2023. The store tells the customer they have a 12-month policy for customers to redeem gift cards and will not honour the gift card.

The law says that most gift cards must have a minimum 3-year expiry period, unless an exception applies.

Businesses should check whether any exceptions apply and can refer to the ACCC website. If exceptions don’t apply, the gift card must be redeemable for at least 3 years after the day it was supplied or purchased.

2. Consumer has paid for a gift card that can’t be used

For example, a gift card a customer has purchased or received doesn’t work. Perhaps the customer can’t activate the gift card or the card is damaged and won’t swipe.

Under the Australian Consumer Law (ACL), consumers have the right to expect certain things when they buy a product or service. These basic rights are called consumer guarantees. If one of the consumer guarantees under the ACL has not been met, you must offer a remedy, which is usually the solution of a repair, replacement, or refund.

Gift cards are covered by these laws. If the gift card doesn’t work and the consumer is not at fault, the business should offer the consumer a refund or a replacement gift card.

3. Consumer is offered a gift card when they shouldn’t be

For example, a customer buys a product that is faulty. The customer attempts to return it to the store for a refund or replacement – but the store only offers the customer a gift card.

The consumer guarantees under the ACL apply in this instance and can’t be avoided. If a product does not meet a consumer guarantee the business must offer the consumer a remedy. The type of remedy (repair, replace or refund) depends on whether the failure is major or minor. Offering a gift card is not appropriate when a consumer is entitled to and wants a refund.

Businesses should understand their obligations in relation to consumer guarantees and not seek to avoid them. For information on consumer guarantees please refer to the ACCC website.

Rules if you sell gift cards

Your business must clearly state:

  • all conditions and restrictions on use of the gift card, including whether there are any limitations on the number of transactions
  • the expiry date of the gift card, which must be prominently displayed (with some exceptions)
  • the activation expiry date for cards that need to be activated
  • whether the card can be reloaded or topped up

Avoid any surprises when the recipient is using the gift card

Recipients should not be required to pay any additional fees or charges on gift cards.

In most circumstances your business cannot have terms and conditions on gift cards that allow you to charge post-supply fees. Post-supply fees may include things like:

  • gift card activation fees
  • gift card account keeping fees
  • balance inquiry fees
  • inactivity fees

There are penalties if a business breaks the rules for gift cards or other parts of the Australian Consumer Law.

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