Concerned that Australians are losing as much as $70 million annually to expired cards, Treasury is preparing to undertake a public consultation process on the prospect of changing the rules for retailers nationally.
It follows a move by the NSW state government last year to force retailers to implement three-year expiry dates on gift cards sold in the state.
But the federal government is considering a policy solution that would go a step further, removing expiry dates all together, effectively overriding state regulation.
The scheme would cost the sector around $138 million in compliance, including changing IT and accounting systems, replacing and redesigning cards, and training staff, Treasury estimated in a recent discussion paper.
The government is also considering matching NSW’s changes and implementing a three-year expiry period, which it said is its preferred option at this stage.
Written submissions are due by May 30, suggesting that the government could turnaround legislation by the end of the year with support from the opposition.
A variety of major retailers have already either removed expiry dates on cards or instituted a three-year expiry period nationally in response to the NSW legislation, including Woolworths, City Beach and Red Balloon.
Red Balloon founder Naomi Simson has said her business spent more than half a million dollars removing gift card expiry dates.
The prospective legislation is expected to be good news for consumers though, who would either must no longer worry about expiry dates or benefit from a significant increase to their shelf lives.
Although business groups have expressed concern that a complete prohibition of expiry dates would incentivise consumers to forget about gift cards, leaving their value on retailer’s books for extended periods of time.
Australian Retailers Association (ARA) executive director Russell Zimmerman said that a three-year expiry period remained the most likely outcome, but that implementation would be an important detail for the sector.
“The whole thing needs to be looked at carefully, the legislation needs to be clear,” Zimmerman said.
“There’s an appetite to do three-year expiry … the consensus is that if there is going to be change it will be that.
The ARA is calling for an extended implementation period for any national changes, having criticised the NSW state government for creating additional costs for the sector by implementing their changes less than a year after the changes passed parliament.