On 3 June 2011 the Ministerial Council on Consumer Affairs resolved to review the regulation of gift cards (Read Communique).
Issues identified by consumer advocates, such as Choice, included:
- access to unused value on expired cards
- hidden fees and charges
- lost/stolen cards
- cards not honoured by administrators of insolvent issuers
- requirement for a minimum threshold spend
No details of proposals for regulation have been released yet.
Current regulation
At its simplest a gift card is a transferable prepaid card.
They are currently regulated on a limited basis by the ePayments Code but they are exempt from the Corporations Act financial services provisions.
ePayments Code
If a financial institution which subscribes to the Code does not know the identity or contact details of a holder of a gift card (eg where they received it as a gift from the buyer), it must instead provide the holder with a means to access balance and transaction information.
Corporations Act
ASIC regards gift cards potentially as “financial products” but has given relief (under RG 185 and CO/05-738) for gift vouchers and cards from the financial services licensing, conduct and disclosure obligations of the Corporations Act (together with the hawking prohibition).
This relief applies where the gift voucher or card has the following characteristics:
(a) it has the ability to store monetary value, which is not redeemable for cash, except where amounts unlikely to be conveniently used under the facility are permitted to be withdrawn;
(b) it is not reloadable (i.e. a client can only make one payment for the gift voucher or card and no person can make additional payments that increase the value of the gift voucher or card, after it is initially acquired);
(c) it can be used on multiple occasions;
(d) it is marketed solely as a gift voucher or gift card; and
(e) where it is subject to an expiry date, appropriate arrangements are in place to prominently disclose that expiry date.
