01.Call for regulation
The ACT Government is considering reforms to better protect consumers against overly restrictive gift card conditions.
In order to provide a fairer deal to consumers at a low cost to retailers, the ACT Government is considering allowing consumers to redeem up to $5 in cash-out option for gift cards with a face value of $50 or less or up to 10% for gift cards with a face value of more than $50.
In this article you'll find:
A push for change
Since we first published our report on gift cards that quickly stop giving, consumers have continued to contact us with stories of cashed-up plastic that has ended up worthless. In most cases, the unspent money goes back to the retailer, as does any amount below a certain threshold (usually $5 or so) – even if you’re quick enough to use the card before it expires. As we argued in November 2010, we think this and other gift card gimmickry amounts to consumer abuse.
Fortunately, some of our readers in positions of influence feel the same way. Eary in 2011 Queensland’s Deputy Premier and Minister responsible for the Office of Fair Trading, Paul Lucas, said he would push for nationwide rules restricting underhanded gift card practices.
Mr Lucas cited the gift card flaws outlined in our report and said he has asked Queensland Fair Trading to identify best practice options with the aim of developing new regulations.
Following this, in June 2011, Australia´s consumer affairs and fair trading ministers agreed to develop options to better protect consumers who purchase gift cards.
In late 2011 the federal government stepped in, by way of the Commonwealth Consumer Affairs Advisory Council (CCAAC), which released an issues paper that highlights the problems in this industry.
CCAAC is an expert advisory panel which provides advice to the Parliamentary Secretary to the Treasurer on consumer policy issues. Former CHOICE CEO, Peter Kell, and former CHOICE Policy Manager, Gordon Renouf, are both members of CCAAC.
Depending on the submissions received, CCAAC can consider the following approaches to dealing with gift card issues:
- an education campaign for consumers
- voluntary best practice terms for retailers
- mandated product disclosure requirements for gift card terms and conditions
- required best practice terms and conditions and better administration processes for retailers
CHOICE on board
CHOICE supports the move to clamp down on abuses relating to expiry and conditions of use in the $1.5 billion gift card industry.
Our November 2010 survey found that nearly all gift cards sold in Australia expire after one year.
At the time, Bunnings offered the only card with no expiry date, though Bunnings has since been joined by Toys “R”Us, EB Games, and sharedvalue.com.
These are steps in the right direction, but most gift cards still run out too soon and can have hidden fees, charges and conditions.
As a benchmark, CHOICE is looking at federal and state legislation in the USA which sets a five year limit on expiry dates, a ban on fees and charges and clear disclosure requirements.
CHOICE Spokesperson Ingrid Just says, "we know from the anger and frustration of consumers who try to get redress that new laws are needed".