Gift cards make a convenient present, especially when you can buy them online or pick one up at the supermarket, Australia Post shop or any of the many retail chain stores that offer them. In fact, it's predicted that Australians will spend more than $10 billion dollars on gift cards in 2023, an increase of nearly 8% on 2022.
And there's sure to be plenty of gift cards bought before 25 December for a quick and easy Christmas present. While research from Pureprofile suggests that 65% of Australians are looking to spend less on Christmas this year, gift cards are still a popular option: 47% of those surveyed said they planned to give them as gifts and 44% want to receive them.
Gift cards have been the subject of numerous complaints to CHOICE over the years
Although they might be a popular, no-fuss present, gift cards have also been the subject of numerous complaints to CHOICE over the years, particularly around premature expiry.
Despite reforms to expiry dates that came into effect in 2019, there are still some pitfalls you should be aware of so that your gift card doesn't end up being worthless.
Here's how to make sure you get the most out of a gift card you buy or receive.
You have at least three years to use your gift card or voucher.
CHOICE has worked hard to make gift cards fairer. In a CHOICE member survey from 2014, 60% of respondents had problems with gift cards, and premature expiry was the biggest issue.
One in three of the 735 respondents had lost the full value of at least one gift card in the previous three years.
We campaigned for a long time to get the expiry periods on gift cards extended, and in November 2019 new laws were introduced that helped make gift cards better for consumers. The regulations meant that gift cards must come with:
- a mandatory 3-year minimum expiry period;
- no fees charged after your purchase (excluding some processing of payment fees such as overseas transaction fees and booking fees);
- a prominently displayed expiry date – either the full date or a period of time. (If the expiry date is shown as a period of time, it must also include the date it was supplied.) If the gift card or voucher doesn't expire, this fact must also be prominently displayed.
There are some exceptions to the law, for example cards that can be reloaded or topped up, and gift vouchers that are for a product or service that's available for a limited time, such as entry to a concert or exhibition.
For more examples, the Australian Competition and Consumer Commission (ACCC) provides details of the rules for gift cards. There are significant penalties if a company is in breach of these rules – up to $30,000 for corporations and $6000 for individuals.
- Choose a card that doesn't expire...
- ...or go for one with the longest expiry date you can find and make sure it meets the rule requiring it to last for at least three years.
- If you haven't managed to use a gift card with three years' validity before it expires, there is no legal obligation on the store to extend its expiry date. However, some stores may be willing to offer an extension if you ask politely, so don't throw away that old card without at least checking first.
- Ideally, look for a card that allows you to easily check the card balance either instore, online or via a phone call.
- If you're giving a gift card for a specific purchase, be mindful that you're very unlikely to get change on the balance remaining on the card. For example, if you're giving your nephew a $600 gift card so he can buy a new paddle board but the one he wants only costs $550 and there's nothing in the shop for less than the remaining $50, that remaining balance may be forfeited.
Lost or stolen cards
- Treat your gift card like cash – if you lose it, it's gone.
- However, some retailers allow you to cancel and reissue a lost card, sometimes for a fee. Conditions apply, so hold on to your receipts for gift cards and jot down details such as the card number.
- You may only be able to use a gift card in a specific store, so choose carefully. Aunty Beryl won't thank you if she lives in Perth and the gift card you give her can only be spent at a restaurant in Sydney.
- Cards that can be used in a group of stores are better, such as those redeemable at any of the Coles Group & Myer stores or the Wish gift cards that can be spent at Woolworths Group retailers such as Big W, Dan Murphy's and Woolies supermarkets.
- Shopping centre cards can potentially be used at a wide variety of stores, but beware: they may not be accepted by all stores in the centre.
- EFTPOS and Visa/MasterCard gift cards can be used at almost any retailer.
Fees and charges
- Fees are usually only a potential issue with Visa and MasterCard gift cards. Most retailer cards have no fees.
- Some cards charge an issue fee and if you're ordering online, the postage and handling fees can be quite high. A virtual card sent by email or added to a person's Apple or Google Pay account may be a better option if you want to avoid these extra charges.
- Others may charge a fee for extending the expiry period or reinstating lost or stolen cards.
- Once a gift card is issued, a business can't charge any post-purchase fees. However, a business can still charge a fee to cover the cost of processing a payment, such as overseas transactions fees, booking fees and payment surcharge fees.
More disappointing perhaps than having a card expire before you can use it, is having the business that issued the card cease trading before you can redeem your gift. If a business closes or changes owners, it may affect your rights as a consumer.
If the changes to trading are temporary – for example, if the store closes for a short period – the ACCC says that the business should provide some form of remedy. This might be as simple as extending the gift card expiry date to cover the period when it couldn't be used.
If a business ceases trading due to insolvency, you become an unsecured creditor, so you'll only be paid after secured creditors and priority unsecured creditors
When a business is sold, that doesn't mean your gift card no longer has value. If the business was bought as an ongoing operation, the new owners have to honour the gift card.
Things get trickier if a business ceases trading due to insolvency. In this instance, you become an unsecured creditor, so you'll only be paid after secured creditors and priority unsecured creditors. That often means you'll be able to get only a small percentage of the value of the card, or even nothing at all.
In that situation you have a few options:
Investigate a chargeback
If the gift card was purchased quite recently and you paid with a credit or debit card or via a payment provider such as PayPal, you may be able to reverse the payment through your financial institution. There are time limits though, so act quickly if you want to take this option.
Find out if you can still make a transaction
If a business continues trading while under administration, you may still be able to make purchases, though there could be some fairly onerous conditions. For example, the administrator may decide that you have to spend an equivalent amount in order to redeem the gift card.
Register as a creditor
This is done via the administrator and means you have at least some chance of getting some or all of your money back.
Apply for compensation
Some states and territories have funds that provide compensation to people who lose money when businesses in a particular sector fail. To find out if this applies in your situation, you should contact your state or territory consumer protection agency.
Stock images: Getty, unless otherwise stated.