Updates to gift card legislation

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Prior to March 2018 the purchase of gift cards, and the manner in which their value was available and distributed, was disadvantageous to many consumers. A gift card purchased prior to March 2018 often contained hidden activation fees, charges for obtaining balance information, and unregulated expiration dates.


These additional charges, which were activated by the use of the card, cost the card owner in value. Therefore, the card was not worth the same value in actual merchandise as the monies taken in payment for the card. Once a card expired, the monies were lost to the consumer and the seller could recoup the balance. This practice cost consumers millions of dollars per year in lost value.


Under these circumstances the consumer was responsible for keeping track of the following limiting factors of their gift card;

  • Review of the unique constrictions and restrictions of each vendor’s card
  • The expiration date for the activation of the card
  • The expiration date upon which the card will no longer hold any value
  • A service fee for transactions
  • The number of transactions permitted
  • The rules for reloading a card


Recently the New South Wales legislators made changes to the gift card laws. Beginning March 31, 2018 consumers will have greater protections when purchasing gift cards. The law will now regulate;

  1. At least a 3-year expiration date on the full value of all gift cards purchased
  2. Fines will be metered against those businesses that continue to use less than a 3-year expiration date on their gift cards
  3. Fines or administrative fees will no longer be permitted to be levied against the purchase price of the card


There are three major exceptions to the new law

  • Other debit/gift cards such as Visa, are exempt from the laws
  • Cards connected to loyalty programs
  • Cards issued prior to March 2018


Additional exceptions include a gift card given

  • By a business to a consumer for free
  • As a form of refund for merchandise returned
  • Prepaid phone or internet cards
  • ATM cards, debit cards, credit cards or charge cards
  • As a temporary marketing promotion
  • A discount card
  • Donated cards used for fundraising
  • Limited by the time of an event


These new laws will be included in the Fair Trading Act 1987 and have taken full force, effective from March 31, 2018. However, the new laws will require some technical elements be met for the protections to apply when cards are purchased online or over the phone. The card must be purchased under the following criteria;

  • An address and contact details provided that are within the boundaries of New South Wales, Australia
  • If only a NSW contact address is provided, that will be sufficient
  • If a NSW delivery address is provided, that will be sufficient


If neither a contact address or deliver address is provided in NSW, the new laws will apply

  • If it is an international website address and a NSW billing address is provided
  • International purchases where only a NSW address is provided


It is important to note that the laws will not apply to the following;

  • Interstate contact/address details and NSW delivery details provided
  • NSW contact details but interstate delivery address provided
  • NSW contact details but interstate delivery address provided


The new law also provides for penalties and fines for those merchants who do not comply as required. In the event that a card is given less than a 3-year expiration date, that date will be void and the card will remain redeemable for at least three years. In addition, the law allows for a minimum penalty to the vendor of $550.00 with a maximum penalty of $5500.00.


Finally, keep these additional small issues in mind. A gift card is akin to cash. If you lose it, the merchant is not bound to replace it. If you do lose a card, and the merchant is willing to reissue it, the same terms and conditions apply as at the time of the original purchase. Be attentive to the terms of receiving change for your purchases versus the remainder of the monies remaining on the card for future use with the same merchant. This will be governed by the unique parameters of each card.


By keeping all of these details in mind when purchasing or using a gift card, you will ensure that you receive the full value of your purchase. In the event that you find yourself in need of assistance regarding the purchase or use of a gift card, please contact the law offices of Owen Hodge Lawyers. At Owen Hodge, we are always happy to assist clients in understanding the full ramifications of any and all of your legal needs. Please feel free to call us at your earliest convenience to schedule a consultation at 1800 770 780.

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