Gift Cards and Vouchers: new requirements

 

Joanne Redburn
Legal Practitioner Director
Email: Joanne.Redburn@nfplawyers.com.au
Phillipa Hooper
Senior Associate
Email: Phillipa.Hooper@nfplawyers.com.au

 

If your organisation issues gift cards or receives gift vouchers from third party donors or sponsors for fundraising purposes, you need to be aware of the changes that came into effect on 1 November 2019.

What Changes?

On 1 November 2019, the Treasury Laws Amendment (Gift Cards) Act 2018 (Cth) amended the Australian Consumer Law (ACL) so that all gift cards supplied in trade or commerce to consumers must have:

  1. a 3-year minimum expiry date;

  2. the expiry date must be shown clearly on the gift card; and

  3. any additional information regarding the card must be prominently displayed.

Post-supply fees for use of the card are also banned. A post-supply fee is a cost that reduces the value of the card, such as administrative fees. It does not extend to fees or charges that may be imposed irrespective of the method of payment, such as charges for replacing a lost card.

What is a gift card?

The new law defines a gift card as “an article (whether in physical or electronic form) that is of a kind that is commonly known as a gift card or gift voucher; and is redeemable for goods or services”.

Exclusions and Exemptions

Excluded:

  • Gift cards that are reloadable or are only redeemable for electricity, gas or telecommunications services.
  • Items that are not commonly known to be gift cards, for example, discount offers (buy one get on free) or customer loyalty cards. 
  • Second-hand gift cards and those provided to registered charities for certain purposes (see further below).

Partial Exemption:

The minimum 3-year requirement doesn’t apply to:

  • gift cards only redeemable for a goods or services available for a limited time (for example, entry to a festival).
  • discount gift cards (for example, massage voucher valued at $100 for $75).
  • gift cards provided as part of a temporary marketing promotion or donated for promotional purposes.
  • gift cards provided as part an employee reward scheme, loyalty programme or in exchange for another gift card.

Hefty penalties for getting it wrong

The Australian Competition and Consumer Commission will be responsible for enforcing the new laws.

If a non-compliant gift card is supplied to consumers, penalties range from:

  • For body corporates:

    • up to $30,000; and/or

    • 55 penalty units (currently $11,500) for an infringement notice
  • For individuals:

    • up to $6,000; and/or

    • 11 penalty units (currently $2,420) for for an infringement notice

Exempt Charities

Gift cards supplied to an entity that is registered under the Australian Charities and Not for Profits Commission Act 2012 (Cth) as having the purpose of advancing social or public welfare are wholly exempt from the new laws. 

Example: As part of a crisis relief program, a registered charity supplies pre-paid Visa cards for necessities. These cards have a one-year expiry date and are subject to monthly administrative fees. Such restrictions are to ensure these are used for immediate assistance and to discourage on-selling.  

What if we don’t issue gift cards but receive them from third parties for fundraising activities? Do these cards need to comply?

Short answer is maybe.

As explored earlier in this article, certain gift cards enjoy full or partial exemption from the new laws.  The application of the new laws turns on whether the gift cards were supplied in ‘trade or commerce’ to a ‘consumer’ for the purposes of the ACL. Whilst its outside the scope of this article to explore in detail what these terms mean, in short “ trade or commerce” broadly means any business activity (for profit or otherwise) and a person is a “consumer” if they acquire goods or services that are priced at less than $40,000 or if over this amount, these goods or services are of a kind ordinarily acquired for personal or domestic use or consumption.

Depending on how your fundraising activities are structured (are they repetitive, organised, professional or involve the supply of goods or services?), you may find that those activities are enough to fall within the ambit of ‘trade or commerce’ under the ACL.

Promotional gift cards

Example: A registered charity holds their annual concert to raise funds for drought relief and as part of their fundraising activities, tickets are sold for various raffle prizes.  Tom’s Pumps donates 5 branded gift cards to promote its own brand/business of selling water pumps and of course, to help the cause!

As the gift cards have been supplied for promotional purposes by Tom’s Pumps, the 3-year expiry requirement does not apply.

Second-hand gift cards

Example: Seawardens are a large not for profit organisation that regularly fundraises by organising a variety of different activities.  As part of the latest fundraising drive, it acquires at a wholesale price, gift cards from one of its sponsors and then on sells these cards to supporters to raise funds. 

Second-hand gift cards are wholly exempt from the new laws. However, gift cards acquired for re-supply are not second hand if not previously supplied to a consumer.  In this example, Seawarden would not be a ‘consumer’ (remember the definition) and its fundraising activities likely to be viewed as ‘trade or commerce’ under the ACL. Therefore, these gift cards must comply with the new laws (unless supplied by an exempt charity as outlined above).

Takeaways

Unless you are an ‘Exempt Charity’ (ie registered with ACNC for the purpose of advancing social or public welfare), ensure that all gift cards supplied on or after 1 November 2019 comply the the new law.   

Due to the complexities involved and hefty penalties if you get it wrong, if you are unsure whether the gift cards issued by your organisation or cards supplied by a third party are caught by the new requirements, please seek legal advice.


Disclaimer:
Reliance on content the material distributed is general information only. The information supplied is not and is not intended to be, legal or other professional advice, nor should it be relied upon as such. You should seek legal or professional advice in relation to your specific situation.