Changes to gift card expiry dates and fees

The NSW Government introduced a mandatory minimum expiry period of three years for gift cards and gift vouchers sold to a consumer in NSW, as well as a ban on post-purchase administration fees, which started on 31 March 2018. The new requirements have been made by amendment to the Fair Trading Act 1987.

The changes aim to strike a fairer economic balance for consumers and businesses in the gift card market. The reforms give consumers access to the full value of their gift card over a reasonable period of time, while maintaining a workable business model for traders.

The reforms do not apply to gift cards and vouchers purchased before 31 March 2018. The terms and conditions in place at the date of purchase of those cards will continue to apply. The information on this page applies to both gift cards and gift vouchers.

Three-year minimum expiry period

The new law sets a mandatory minimum expiry period of three years for most gift card products. The period begins from the date a gift card is sold to a consumer (issue date). Businesses can choose to apply an expiry period longer than three years and no maximum expiry period applies. Some businesses have already implemented the change, offering either a three-year minimum expiry period, or no expiry date, on their cards.

Ban on post-purchase fees

Once the gift card or voucher has been issued, there is a ban on charging any post-purchase fee associated with redeeming the card/voucher that would reduce its value. Terms used for post-purchase fees that are banned include: activation fees, account keeping fees, balance enquiry fees, telephone enquiry fees and fees applied when a card is inactive or not being used (sometimes called dormancy or inactivity fees).

There are fees that a business can charge as part of a sale that is a cost of processing a payment. These fees apply regardless of the method of payment like overseas transaction fees, booking fees or payment surcharge fees. These are not considered post-purchase fees and are not captured by the ban. Go to our statement of regulatory intent (PDF, 286.24 KB) for more information.

Transition period 31 March to 30 September 2018

There will be a transition period from 31 March to 30 September 2018.

During this phase, businesses can run down their existing stock of pre-printed gift cards but must inform customers that a three-year expiry and no post-purchase fees apply. Businesses can:

  • physically amend cards at the point of sale to strike out any reference to an expiry period which is less than three years, and/or insert an expiry date which is no less than 3 years into the future from the date of purchase
  • update terms and conditions on the store’s website
  • put signage on stands where gift cards are located and/or at point of sale
  • provide the customer with printed information at the point of sale about the changes
  • add a note to any receipt issued when the gift card is purchased.

For gift cards sold online (digital or e-gift cards/vouchers) during the transition period, businesses should ensure that the cards or vouchers carry an expiry period of at least 3 years.

Businesses should take steps to inform customers that a 3-year expiry and no post-purchase fees apply. This may include:

  • updating terms and conditions on the business’s website
  • updating terms and conditions available at check out

Do the changes apply to small business?

Yes. The only exceptions are on certain gift cards types that are excluded from the reforms.

How do I know if the laws apply to me?

If you are unsure whether the new laws apply to a particular gift card or voucher, answering the following questions will help:

Has there been a sale of a gift card?

If the answer is yes, the card or voucher is covered by the new laws unless specifically excluded. Cards that have not been sold, such as donated cards or unsolicited discount vouchers handed out on the street, and are not covered by the new laws.

Has there been a sale of a gift card to a consumer in NSW that can be used for goods or services in NSW?

If the sale is to a consumer as per the following definition, the card is covered by the new laws unless specifically excluded.

The meaning of consumer in these laws is as it is defined in the Australian Consumer Law (ACL) - this includes the sale of gift cards or vouchers to a business in some circumstances, but not if they are sold for resupply, among other purposes (ACL, section 3).

Even if you answered yes to the these questions, the card may still be excluded from the new laws.

Some categories of cards are excluded from the new laws even if they are sold to a consumer (as per the definition) in NSW.

An example of a card that fits this category is one that is ‘purchased’ by redeeming points through a customer loyalty program. The table of excluded gift cards below has the full list of excluded card types.

Practical examples of how the laws apply

Use these pages of everyday gift card and voucher transactions as examples of how the new gift card laws apply:

Resources for businesses

Fair Trading has developed resources that businesses can use at the point of sale to help inform customers of the changes. View or download the materials from the gift card reforms - helping business prepare for new gift card laws page.

Gift cards sold online

The reforms apply to gift cards sold to a consumer who is in NSW at the time of sale or sold to a consumer who provides a NSW address in connection with the sale. Cards sold to consumers who provide any address at the point of sale that is outside NSW are not required to carry a three-year expiry date.

Unless you are certain and can demonstrate that the customer resides outside NSW, it is safer to assume the customer is NSW-based and therefore the gift card they purchase from you is subject to these reforms.

Gift card is purchased online or over the phone

Reforms apply?

NSW address for delivery and NSW contact details are provided

Yes

Only a NSW contact address provided

Yes

Only a NSW delivery address provided

Yes

No contact or delivery address are provided

Yes

International websites only a NSW billing address provided

Yes

International websites only a NSW delivery address provided

Yes

Interstate contact/address details and NSW delivery details are provided

No

NSW contact details but interstate delivery address are provided

No

International websites any contact or delivery address provided are not in NSW

No

Included and excluded cards

All gift cards or vouchers sold in store or online to a consumer who is in NSW at the time of sale or sold to a consumer who provides a NSW address in connection with the sale are covered, unless specifically excluded.

These specific gift cards or vouchers are excluded from complying with the new laws:

  • A gift card or voucher that is given by a business for free to a consumer
  • A gift card or voucher exchanged for goods returned to the supplier of the goods
  • Prepaid cards for phone credit or internet access
  • ATM cards, debit cards, credit cards or charge cards
  • Gift cards supplied as part of a customer loyalty or employee rewards program
  • A gift card or voucher supplied as part of a temporary marketing promotion as a bonus to the purchase of a good or service
  • A gift card or voucher sold for a particular good or service that is below the market value of the good or service (a genuine discount)
  • A gift card or voucher sold or donated for use in a fundraising appeal, including to a charity or not for profit organisation
  • A reloadable card that uses EFTPOS, Visa or Mastercard or a similar electronic payment system
  • A gift card or voucher for a good or service available for a limited time where the card or voucher expires at the end of that period (for example, entry to a concert or museum exhibition, or a pair of shoes that is only available for a limited time)

Temporarily excluded

A non-reloadable prepaid gift card that uses EFTPOS, Visa or Mastercard or a similar electronic payment system, sold prior to 1 October 2018 will be excluded from complying.  From 1 October 2018, these cards must comply with the new laws.

Replacements for lost and stolen cards

If a business chooses to replace a lost or stolen card, the new law does not apply because the replacement transaction is not a sale of a new card. The terms and conditions remain the same as at the time the card was bought. For cards purchased after 31 March 2018, best practice would be for a business to issue a replacement card with the balance of the three year expiry period that was left on the lost or stolen card.

Activation dates

Activation dates can still be used but a consumer must have at least three years to redeem the gift card from the date of sale.

Sales to interstate visitors

If a visitor from another state or territory buys a gift card while they are in NSW and the gift card can be redeemed for goods or services in NSW, the reforms will apply to the card or voucher sold to them.

Honouring gift cards issued under the previous ownership

If the business you now own is a ‘going concern’ (able to pay its debts when they are due, and continue to operate without any intention to liquidate or wind up operations for at least the next 12 months) then you’re required to honour existing gift cards purchased when the business was under previous ownership. Go to the ACCC website for more information.

Accounting for gift card liabilities

Generally speaking, a minimum three-year expiry date on gift cards will mean that it may take longer to account for revenue from their sale. This is because gift card revenue is usually accounted for when a gift card is redeemed or expired so the records of financial liabilities resulting from gift card sales may need to be maintained for a longer period of time. There is currently no uniform accounting standard for gift cards so the impact of gift card reforms on your business may vary. Contact your accountant or the Australian Taxation Office for advice.

Does the retailer or supplier need to comply?

The law applies to the sale of the gift card. Generally, it’s the retailer of the gift cards that will need to comply with the reforms. It is recognized that some businesses sell their gift cards or vouchers to another business to sell on to consumers. The laws do not apply to the sale between businesses however are still enforceable when sold to a consumer. Business should work together to make sure that compliant gift cards are offered for sale.The level of responsibility applicable to other players in the supply chain will depend on the circumstances. For example, if a third-party provider supplies a gift card that is not compliant to a retailer, both the supplier and the retailer could be investigated.

Penalties for non-compliance

A breach of the new laws could attract a penalty infringement notice of $550 and result in a maximum penalty of $5,500. Fair Trading has published a statement of regulatory intent (PDF, 286.24 KB) that sets out our approach to compliance and enforcement during the transition period.

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