How to use gift cards and vouchers to get you through these difficult times

We all want to support our local businesses during this period of ‘social distancing’. One way for us to do this it is to purchase ‘vouchers’ or ‘gift cards’ from our local merchants.

If you’re a business owner and you want to offer these vouchers and gift cards, then it’s important you comply with the Australian Consumer Laws.

You may be thinking – ‘Hey, I’m just trying to survive here!’

We understand where you’re coming from. But there will be bad-actors in the community who will seek to exploit this vulnerable time, and you need to ensure you stick to the laws and come out of this smelling like roses.

It’s not that hard to do the right thing and comply with the laws. In fact, compliance will make your vouchers more appealing to your clientele. They will have more confidence that you are the sort of organisation that will still be around when they go to use the voucher.

So here we go…

Display the Expiry Date

If you’re going to impose an expiry date, it must be displayed on the voucher. Since 1 November 2019 most vouchers in Australian must have a minimum 3 year expiry date.

The voucher must show:

  • The exact date the voucher will expire;
  • The date the card was issued and that it will expire in 3 years; or
  • If the voucher has NO expiry date.

The 3-year requirement does not apply to all vouchers. In particular, it does not apply if the voucher is:

  • Able to be topped up;
  • Donated for promotional purposes (e.g. a business handing out vouchers to passers-by for its grand opening);
  • Available only for a specified period or event (e.g. a particular theatre performance);
  • Supplied at a genuine discount (e.g. $60 card for a massage valued at $100);
  • Part of an employee reward scheme; or
  • Part of a customer loyalty program.

Redeeming the Voucher for Cash

You must communicate the terms that govern how the voucher can (and can’t) be used.

For example, ‘This gift card can only be used in-store and cannot be redeemed for cash.’. Other terms may be that the voucher can only be used if you buy:

  • From a specified business or branch/store;
  • A particular product or service from the business;
  • At certain times or on certain days; or
  • Before an offer expires or stocks run out

Charging fees

You need to be careful not to charge certain ‘post-supply’ fees that effectively reduce the value of the voucher. For example, administration fees or fees to check the account balance of the voucher.

There are some situations where you can charge fees, including fees for re-issuing lost, stolen or damaged vouchers, currency exchanges or booking fees, but only if you charge these same fees to people buying stuff without a voucher.

Terms and Conditions

Some key terms you must communicate to the public are:

  • What legal entity is issuing the voucher;
  • The expiry date;
  • Exclusions or limitations on using the voucher;
  • Any limitations on the number of transactions that can be done with the voucher;
  • Whether or not the voucher can be topped up;
  • How to redeem the voucher;
  • What happens when purchases exceed the remaining voucher value;
  • Rules around exchanging items purchased with a voucher; and
  • How your business deals with faulty, damaged and lost vouchers.

False and Misleading Representations

As always, a business is not allowed to make statements that are untrue or create a false impression. Do not, for example, tell your clients that the voucher can be used in another store, if it can only be used in your store.

Penalties

The ACCC can impose penalties on businesses that breach voucher and gift card regulations. Consumers must be protected, and companies can face fines up to $30,000 and non-companies up to $6,000 for breaching rules surrounding gift cards and vouchers.

Remember that the bureaucrats will be looking for something to do when this crisis has passed, and enforcing laws and collecting penalties has been among their favourite pastimes up to now.

Recommendations

If you are going to offer vouchers, you must:

  • Make sure the voucher’s terms appear on your websites and other promotional materials, including the voucher itself;
  • Make sure you have in place systems, training and compliance materials so staff know what to say (and what not to say); and
  • Have signage on gift card or voucher displays and at point of sale with this material.

What to do next

To keep the ‘cash flowing’ in these difficult times, call us for help setting up your compliant gift card or voucher offering – on 1300 654 590.

We can also help you if something has gone wrong and you receive an infringement notice from the Australian Competition and Consumer Commission (ACCC).

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