Selling and issuing gift cards

These case studies have been developed to assist businesses understand where and how gift card laws apply in practice.

Note: on this page, the terms 'gift card' and 'gift voucher' have the same meaning.

Cards sold before 31 March 2018 

A dog grooming business was selling gift cards with a 12-month expiry period to its customers. For cards purchased before 31 March 2018, the 12-month expiry period and other terms continue to apply.

Cards sold from 31 March 2018 

A cake shop sells gift vouchers with a 12-month expiry period to its customers. From 31 March 2018, the shop must sell gift vouchers with a 3-year expiry period.

Cards sold in-store inside and outside NSW

Example 1

Nathan operates a fishing tackle shop in NSW and sells gift cards. Gift cards that are sold to customers in Nathan’s shop must have a 3-year expiry period.

Example 2

Sharon operates a chocolate shop in Queensland. A tourist from NSW visits Sharon's shop and buys a gift voucher. As the voucher was not purchased in NSW, the gift voucher is not covered by the NSW laws.

Cards sold online 

Example 1

A consumer buys a gift voucher online and provides a delivery address and billing address that are in NSW. As these are NSW addresses, the new laws apply.

Example 2

A consumer purchases a gift voucher online and provides a delivery address in Victoria. As the address is outside of NSW, the new laws do not apply.

Example 3

An online retail store sells e-gift vouchers to consumers. At checkout, it does not ask for an address other than an email. As the store cannot tell if the consumer is in NSW, it should sell the voucher with a 3-year expiry period.

Cards sold under promotions and giveaways 

Example 1

A shoe shop decides to run a gift card giveaway promotion in-store to celebrate its 10-year anniversary. Every 10th person who walks into the store receives a $25 gift card.

As the gift cards are being given away for free, the cards can have any expiry period of less than 3 years.

Example 2

An electronics store offers a $100 gift card with any sale of a TV over $1000.

The gift card can have an expiry period of less than 3 years, as it is being offered as a gift with purchase as part of a promotion.

Cards sold for discounted goods, services and experiences 

Example 1

A beauty salon sells gift vouchers specifically for an 'Ultimate Relaxation Package' that includes a facial, massage and body scrub. Each part of the package is unique and not offered in other packages or services provided by the salon.

The package’s normal retail price is $250 but it is being offered for $170 as part of a special sale.

The gift voucher for this package can have an expiry period of less than 3 years because it is for a specific service that is being offered at a genuine discount.

Example 2

Phil runs a website that sells gift vouchers for sky diving experiences provided by Company A.

Company A would like Phil to sell gift vouchers for a 3-hour sunset sky diving experience that is being offered at a discount. The vouchers are valid for 3 months only. The short expiry period is valid as the gift voucher is for a specific experience that is being offered at a discount.

Cards sold for time-limited offers 

A gift card is issued for a theatre performance that only runs for 3 months. The card’s terms and conditions state that the gift card expires at the end of this 3-month period.

As the gift card is for a specific, timebound event, it is not required to have a 3-year minimum expiry period.

Cards issued under a loyalty rewards program 

Example 1

A club offers members a $50 gift voucher to use at its bistro. The voucher is only redeemable in the month of the member’s birthday. The new laws do not apply to these vouchers.

Example 2

A business owner chooses to award the employee of the month with a gift card. This award is part of a 3rd-party operated formal employee rewards program set up by the business owner. The gift card entitles the employee to $100 to use at the business owner’s store. The new laws do not apply to these cards.

Cards issued in exchange for returned goods 

A clothing store offers a gift card or credit note for “change of mind” returns on goods bought by customers. A consumer returns an item of clothing and is given a gift card. The new laws do not apply to these cards.

Cards issued under fundraising activities 

A bowling club runs a weekly raffle with the winner receiving a gift voucher entitling them to a free meal at the club’s bistro.

The meal voucher can have an expiry period of less than 3 years because vouchers that are donated for free are exempt from the new laws.

Prepaid phone/internet service cards 

A convenience shop sells prepaid SIM cards. The new laws do not apply to these cards or cards for any other utility.

Payment system cards

Example 1

A post office sells prepaid, single load Visa, Mastercard and EFTPOS gift cards with a 12-month expiry period printed on it. These gift cards cannot be topped up or used to get cash.

If the gift card is sold between 31 March and 30 September 2018, it does not have to a three-year expiry period.

From 1 October 2018, these cards must be sold with a 3-year expiry period.

Example 2

A supermarket in NSW sells reloadable Visa, Mastercard and EFTPOS gift cards. These gift cards can be topped up. This type of gift card is exempt from the new laws.

Business to business card transactions 

Example 1

A wholesale supply of a bulk lot of gift cards sold from Company A to Company B for the purposes of resupply to consumers in a subsequent transaction (that is not exempt under the Regulation).

Under the transaction from Company A to Company B, the cards will generally not need to have a 3-year expiry period. However, at the point of sale to the consumer the cards must come with a minimum 3-year expiry.

If the cards are sold in breach of this requirement, Company A may still be liable to honour the gift cards under the voiding provisions for up to 3 years.

Example 2

A business decides to buy gift cards from a store to give to employees as Christmas presents.

The cards should have a 3-year minimum expiry period as the business is considered a consumer for the purposes of the law. As the business is purchasing the cards to give to employees as an 'ad hoc' initiative, it is unlikely to be considered a formal employee reward program.

Example 3

A manufacturer sells gift cards to a retail store to on-sell to its customers. The transaction between the manufacturer and retail store would not be covered by the new laws. However, the retail store’s sales of the gift cards to consumers would be covered by the reforms. At point of sale to the consumer, the cards must have a 3-year expiry period.

Invalid expiry dates 

Aidan bought a gift voucher from the local games shop on 31 March 2018. It only had a 12-month expiry period printed on it and Aidan was not given any extra information with the voucher showing that he had 3 years to use it. He contacted the store who told him that it was only valid for 12 months.

Under the new gift card laws, the 12-month expiry period is void. A 3-year expiry period automatically applies to Aidan’s voucher.

Administration fees after purchase 

Example 1

Hannah runs an online business and sells digital gift cards to consumers in NSW. Once a card is purchased, Hannah charges consumers a $2.50 gift card activation fee and $2.50 every six months as an administration and maintenance fee.

Hannah can no longer apply these fees, as they are post-purchase administrative fees which were banned from 31 March 2018.

Example 2

Dan operates a scuba diving business in NSW and sells gift cards. Dan charges all consumers a $5 booking fee when they book a scuba diving course as well as the cost of scuba diving. On Dan’s business website, the terms and conditions clearly state that all consumers will be charged a $5 booking fee, regardless of how they pay.

Dan can continue to charge a booking fee, as it applies to all consumer sales regardless of whether a consumer makes a payment with a gift card, credit card, debit card or cash.

Prev Buying and using gift cards