Every year, Australian consumers suffer an estimated loss of $70 million through gift cards expiring before use. On 18 October 2018, the Treasury Laws Amendment (Gift Cards) Act 2018 (Gift Card Act) was passed in an effort to reduce this loss. Fintech card issuers should be aware of the upcoming changes and start making preparations to ensure that they continue to be compliant with the regulatory requirements.
What will change?
The Gift Card Act amends the Australian Consumer Law to create a national regime where:
- gift cards must have a minimum expiry period of three years;
- expiry information on gift cards must be prominently displayed; and
- the charging of fees (except certain prescribed fees) after a gift card has been supplied will be prohibited.
We expect that the amendments will not apply to reloadable cards.
When will this law apply?
The new laws will apply to gift cards that are supplied on or after 1 November 2019.
Why has this Act been passed?
In October 2017, New South Wales legislation was passed which introduced a minimum three year expiry for gift cards sold in NSW or to consumers with a NSW address. South Australia has recently introduced a bill which proposes to impose similar requirements on gift cards sold to consumers in SA.
The national Gift Card Act is a clear response to the legislative activity in NSW and SA. The harmonisation of different expiry requirements is intended to assist consumers in more effectively using gift cards and also to give certainty to business owners operating across the country.
The cost of complying with this extended expiry period to businesses is estimated to be $9.4 million per year. However, we note that these costs are potentially much less than the costs of complying with individual State and Territory based legislation.
Impact of this Law
Consumer protection lies at the heart of this legislation. While the changes are simple, they will improve fairness and help consumers more effectively utilise gift cards.