Gift vouchers and gift cards

The Commonwealth Consumer Affairs Advisory Council (CCAAC) has invited public comment on a review of gift cards in the Australian market.

The issues paper seeks evidence and views about whether consumer detriment is caused by the purchase and use of gift cards by Australian shoppers.

In releasing the paper, Parliamentary Secretary to the Treasurer, David Bradbury, said the gift card market is estimated to be worth around $1.5 billion.

“Gift cards are often subject to terms and conditions which consumers need to ensure they read and understand,” Mr Bradbury said.

“As gift cards have grown in popularity, fair trading regulators have received complaints from consumers about a range of issues related to the cards, including the application of expiry dates, restrictions on using gift cards for low-value purchases, and the rights of gift card holders in the event of a company becoming insolvent.

“This issues paper invites members of the community to come forward with their experiences of purchasing and using gift cards to help inform CCAAC’s inquiry.”

University of Southern Queensland law lecturer Nicky Jones argues it is unjust for retailers to accept consideration for gift vouchers and then refuse to deliver promised goods or services when the vouchers expire.

In her paper “Gift Vouchers and Expiry Dates: When the Gift Stops Giving” (Queensland University of Technology Law & Justice Journal 213), Dr Jones recommends amendments to Australian consumer laws to protect shoppers from losing the benefit of unused and expired gift vouchers.

“Currently, the retailer can rely on the gift voucher’s expiry date to avoid providing goods or services under the voucher. Indeed, retailers have a commercial interest in their gift vouchers expiring unused,” she writes.

The CCAAC issues paper says gift cards are a popular choice with consumers for a number of reasons.

“Gift cards offer ease and convenience in choosing a suitable gift, are easily posted or delivered and allow the recipient the freedom to choose a gift they want,” the paper says.

“Retailers are also attracted to gift cards because they increase sales, reduce the return of unwanted gifts, build store loyalty and result in incremental sales as consumers may spend more than the face value on the gift card.”

In discussing expiry dates, the paper points out that card issuers have accounting considerations, such as financial reporting and the treatment of lost cards.

In North America, most US states and Canadian provinces regulate gift cards in some fashion. That’s not the case in Australia.

Group-buying schemes

I welcome the review and hope there is more discussion than there has been so far before public consultation ends on March 2, 2012.

Perhaps the inquiry should have been extended to cover group-buying schemes like Living Social and Groupon. The difference, I suppose, is that people generally buy group discounts for themselves, whereas gift cards are for others.

The issue of redemption is common though. I have been caught several times with restaurant vouchers having expired.

In relation to gift cards, I believe they should be valid for at least five years. They are effectively cash and if I choose to give my son a $100 voucher he should be able to redeem it at any reasonable time in the future.

It isn’t reasonable if a card expires in less than 12 months. As Nicky Jones observed, the retailer then has a vested interest in cards going unused.

• Visit here for details about how to make a submission.
• Here is the issues paper.