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Australian Gift Cards: Additional Consumer Protections

Every year, Australian consumers suffer an estimated loss of $70 million through gift cards expiring before use. On 18 October 2018, the Treasury Laws Amendment (Gift Cards) Act 2018 (Gift Card Act) was passed in an effort to reduce this loss.  Fintech card issuers should be aware of the upcoming changes and start making preparations to ensure that they continue to be compliant with the regulatory requirements.

What will change?

The Gift Card Act amends the Australian Consumer Law to create a national regime where:

  • gift cards must have a minimum expiry period of three years;
  • expiry information on gift cards must be prominently displayed; and
  • the charging of fees (except certain prescribed fees) after a gift card has been supplied will be prohibited.

We expect that the amendments will not apply to reloadable cards.

When will this law apply?

The new laws will apply to gift cards that are supplied on or after 1 November 2019.

Why has this Act been passed?

In October 2017, New South Wales legislation was passed which introduced a minimum three year expiry for gift cards sold in NSW or to consumers with a NSW address. South Australia has recently introduced a bill which proposes to impose similar requirements on gift cards sold to consumers in SA.

The national Gift Card Act is a clear response to the legislative activity in NSW and SA. The harmonisation of different expiry requirements is intended to assist consumers in more effectively using gift cards and also to give certainty to business owners operating across the country.

Costs

The cost of complying with this extended expiry period to businesses is estimated to be $9.4 million per year. However, we note that these costs are potentially much less than the costs of complying with individual State and Territory based legislation.

Impact of this Law

Consumer protection lies at the heart of this legislation. While the changes are simple, they will improve fairness and help consumers more effectively utilise gift cards.

This post was written by Elise Hamblin.

Copyright 2018 K & L Gates

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About this Author

Jim Bulling, KL Gates, financial services lawyer, funds management attorney
Partner

Mr. Bulling's practise focuses on banking and financial services and he acts for a range of entities in the financial services and funds management industry. His clients include Australian and international investment managers, banks, trustees of superannuation funds, wholesale and retail investment trusts, funds management companies and financial planning groups.

His main areas of focus include banking and financial product disclosure issues, financial services compliance issues, financial product distribution issues and superannuation and...

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Edwin Tan, KL Gates, investment fund attorney
Lawyer

Mr. Tan is a commercial and regulatory lawyer with a focus on the financial services industry. He advises on a range of Australian regulatory and compliance issues relevant to FinTechs, fund managers, financial advisers and other financial services entities.

Mr. Tan also provides advice on governance and compliance measures targeted at the prevention of bribery, corruption and anti-money laundering.

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