When should gift cards expire? Online retailers say they’re flexible

Heather McIlvaine & Matthew Elmas

16th Oct 2017

The NSW government is preparing to introduce legislation that will mandate a three-year expiry on gift cards sold in the state, despite industry concerns that the changes could be unworkable for national retailers and small businesses.

Under the proposal post-purchase fees and charges would be “stamped-out”, and retailers would be required to facilitate the mandatory expiry period specifically for NSW consumers.

The NSW Government is concerned that consumers are being “gouged” by current card expiry dates, with Minister for Innovation and Better Regulation Matt Kean claiming that a twelve-month term is insufficient.

“When consumers hand over their hard-earned money, they rightly expect to get what they pay for,” he said.

“I’m fed up of business taking money from shoppers and providing nothing in return, which is why I’m putting consumers first and making sure they get a fair deal.”

Kean said up to 8 per cent of card recipients aren’t using the full balance of the circa 34 million gift cards sold nationally each year and that the changes stand to deliver up to $60 million annually back to shoppers.

But industry groups have slammed the move as “unnecessary”, with the Australian Retailers Association calling for a non-binding industry code-of-conduct that would recommend a 12-month expiry period as best practice.

In a joint-statement with the NSW Business Chamber, the Australian Sporting Goods Association, Franchise Council of Australia and Restaurant and Catering Australia, ARA executive director Russell Zimmerman called for the proposal to be abandoned.

“Introducing a three-year minimum expiry limit for gift cards within New South Wales places an unnecessary regulatory burden and significant additional administrative costs on small, medium and large businesses,” Zimmerman said.

The ARA is concerned that national retailers who sell gift-cards in other states will be left with an inconsistent regulatory landscape that will require special procedures to be created for NSW consumers at added cost to traders.

Online retailers, which lack physical stores located in NSW, are facing additional uncertainty over the changes and how they could be facilitated.

But it’s not as simple as the proposed changes being good for consumers and bad for retailers.

Booktopia’s Tony Nash said he personally thinks gift vouchers shouldn’t ever expire, but for accounting purposes, it’s necessary to have an end date on the books.

The company’s gift cards officially expire after one year, but Nash has instituted an unwritten rule to reinstate gift vouchers whenever a customer asks.

“We have a company policy to reinstate no matter what,” he told Internet Retailing.

Showpo has a similarly flexible policy for its gift cards, which expire after one year.

“[Our] current policy is one year, however, we are very flexible. If a customer wants to extend this, we are more than happy to do so,” a spokesperson for Showpo’s Customer Happiness Squad told Internet Retailing.

“From a customer happiness point of view, there may be credit pending for up to three years which we classify as dead money. This isn’t necessarily a burden, as we still generated revenue from the original purchase, although it can be [if] the gift card holder or issuer wants their money back for it being unwanted or unused. Or if the customer has money left over on their card and wants it refunded because they don’t have enough to purchase another item.”

Meanwhile, Julie Mathers, CEO of Flora & Fauna, said 95 per cent of customers who use a gift card do so within three weeks of its issue date, and that very few are never redeemed.

“I don’t see the value three years would bring to a customer or a retailer when the validity is one year plus currently,” she told Internet Retailing.