Mandatory gift card expiry proposed in NSW

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Updated: 11am AEST 11 October 2017

The NSW government is preparing to introduce legislation that will mandate a three-year expiry on gift cards sold in the state, despite industry concerns that the changes could be unworkable for national retailers and small businesses.

Under the proposal, post-purchase fees and charges would be “stamped-out” and retailers would be required to facilitate the mandatory expiry period specifically for NSW consumers.

The NSW Government is concerned that consumers are being “gouged” by current card expiry dates, with Minister for Innovation and Better Regulation Matt Kean claiming that a twelve-month term is insufficient.

“When consumers hand over their hard-earned money, they rightly expect to get what they pay for,” he said.

“I’m fed up of business taking money from shoppers and providing nothing in return, which is why I’m putting consumers first and making sure they get a fair deal.”

Kean said up to 8 per cent of card recipients aren’t using the full balance of the circa 34 million gift cards sold nationally each year and that the changes stand to deliver up to $60 million annually back to shoppers.

But industry groups have slammed the move as “unnecessary”, with the Australian Retailers Association calling for a non-binding industry code-of-conduct that would recommend a 12-month expiry period as best practice.

In a joint-statement with the NSW Business Chamber, the Australian Sporting Goods Association, Franchise Council of Australia and Restaurant and Catering Australia, ARA executive director Russell Zimmerman called for the proposal to be abandoned.

“Introducing a three-year minimum expiry limit for gift cards within New South Wales places an unnecessary regulatory burden and significant additional administrative costs on small, medium and large businesses,” Zimmerman said.

The ARA is concerned that national retailers who sell gift-cards in other states will be left with an inconsistent regulatory landscape that will require special procedures to be created for NSW consumers at added cost to traders.

Online retailers, which lack physical stores located in NSW, are facing additional uncertainty over the changes and how they could be facilitated.

Inside Retail understands that the Minister was originally considering removing expiry dates entirely at earlier consultation with industry groups several weeks ago, but appears to have favoured a three-year expiry at this stage without explicitly ruling out a complete removal.

The move would mirror regulation passed in parts of Canada over the last decade, which have done away with expiry dates completely.

The ARA has further concerns that small to medium businesses issuing handwritten vouchers will find it difficult to navigate mandatory expiry dates, and that NSW Fair Trading will find it costly to enforce new rules on impacted traders.

Kean said more than 1300 complaints had been made about gift cards to NSW Fair Trading over the past five years, a rate of 0.7 complaints per day across the state during that period.

“Receiving a gift card on a special occasion should be a fun experience, but instead it has become an unwelcome headache for shoppers, and it’s just not good enough,” Kean said.

“That’s why I am putting consumers first and proposing reforms that will make it illegal for businesses to issue gift cards with an expiry period less than three years.”

Zimmerman has previously taken the code-of-conduct proposal to the Minister, but said today that it appears he’s “not listening anymore”.

“The minister has not consulted with the industry on this issue properly, we suggested a code-of-conduct and he hasn’t even considered that,” Zimmerman said.

Kean said on Tuesday that stakeholder consultation would take place before a Bill was drafted and put before parliament.

“These reforms will apply to gift cards purchased by consumers in NSW that are capable of being redeemed in NSW, and I think that’s a more than fair approach,” Kean said in a statement.

“We have also taken feedback on board from retailers regarding interstate transactions, and the legislation will make it easy for businesses to ensure that they comply.”

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