DID YOU KNOW IF YOU, OR A BUSINESS YOU BOUGHT, OFFFERED GIFT CARDS YOU COULD FACE THOUSANDS IN FINES IF YOU DON’T MEET CERTAIN RULES?

If you are a business that offers gift cards or purchases, as a going concern, a business that offered these, you must ensure you are meeting the Australian Consumer Law as it applies to gift cards and vouchers, otherwise you could face thousands of dollars of fines and penalties in addition to reputation damage to your business, one you may have only just bought.

The Exposure:

Breaches of these laws with recently increased obligations/penalties can attract pecuniary penalty fines up to $30,000 for companies and $6,000 for individuals. In addition, if the ACCC observes any infringement and has a reasonable ground to believe there has been a breach of gift card provisions they can issue a notice that as of 1 January 2023 increased penalties to $15,125 for corporations and $3,025 for individuals per notice.

Therefore, it is essential you not only educate yourself on the rules associated with this type of sale but ensure your terms and processes are drafted and in place to avoid the risks!  (For those looking to buy a business this is something you definitely need to consider in your due diligence and contracts given the transfer liability risks).

The Gift Card

A gift card, also known as a gift voucher, is usually loaded with money.

The person who receives the gift card can exchange it for goods or services to the value of the amount on the card. Typically, you cannot exchange gift cards for cash. A gift card may be in physical or electronic form i.e. card, voucher, or code sent electronically. The conditions on the gift card must be clear.

A business must clearly state:

·         all conditions and restrictions on the use of gift cards;

·         the expiry date of the gift card – which must generally now be for at least 3 years;

·         any activation expiry date for cards that need to be activated;

·         whether the card can be reloaded or topped up; and

·         any post supply fees.

With very minimal exceptions, businesses can’t charge administrator type or post purchase fees and/or expense to diminish the general worth of the gift card. The ban does not cover fees a business can charge as part of a sale to cover the cost of processing a payment, including:

·         overseas transaction fees;

·         booking fees; and

·         payment surcharge fees.

Fees can also potentially be charged for the reissue of a lost, stolen or damaged card.

It should also be noted that the 3 year rule expiry requirement, does not apply to all gift cards. There are some exceptions including those cards

·         able to be reloaded or topped up;

·         donated for promotional purposes.

·         available only for a specified period.

·         supplied at a genuine discount;

·         part of an employee reward scheme;

·         part of a customer loyalty program;

·         second-hand;

·         part of a temporary marketing promotion;

·         supplied to specific charities or government agencies.

Next Steps

Again these are essential matters to consider if you:

-       offer Gift Cards;

-       have purchased a business that offered them; or

-       are looking to purchase another business that offers them.

You can take steps to avoid financial liability and reputation damage.

To learn more or get taking action to ensure you are protected, book in a free Discovery Call now.