Righting a Wrong !

The experience many people had last Christmas when the Dick Smith electronic stores folded has caused the politicians to introduce legislation to cleanup the rules that apply to the gift card industry.Over the years, many strange and illogical conditions have been quietly put in place by individual card companies and the outlets which accept them as payment.

When gift cards were first introduced many years ago they were open ended.   The introduction of a one year expiry date made no sense.  It was sneaked in silently and some outlets began to refuse to honour cards on lower priced sale items.  They insisted that the cards could only be applied to full priced merchandise - and that was legally questionable.   The legislation being considered in Federal parliament seeks to mandate a five year validity on all gift cards.

Basically, a gift card is simply a more socially acceptable alternative to cash in the eyes of the donor.  The card company is paid the amount shown on the card and this can be exchanged for goods in either the store nominated on the card, or in an open market of accepting stores.  There is really no valid reason that a gift card should have any conditions imposed that do not equally apply to banknotes.

The legislation before parliament also requires any final balance under ten dollars to be redeemed in cash.  In most cases the card holder finds a few dollars still remaining on the card but is unwilling to buy an unwanted and expensive other item to eliminate that balance.  As a result, those dollars remain in limbo and deliver extra profit to the card issuer.  It would make sense to round off what amounts to loose change by a cash withdrawal rather than insist that the total amount must form part of a purchase.

Another anomaly that will be addressed with this legislation is the rules that apply to gift cards when the involved stores come under financial administration.  The Dick Smith administrator refused to honour this company's gift cards which were widely sold in the run up to Christmas and the appointment of an administrator happened early in the new year.   Several years earlier, a similar situation happened with a national bookselling chain.

The sticking point was that while the gift cards were refused, in both cases the stores continued to trade for a long period - before finally closing their doors.  This legislation will forbid the refusal to honour gift cards - while ever trading continues.

Hopefully, the parliament may also consider requiring the issuer of gift cards to either insure their face value for redemption in the event the nominated stores cease trading or require the funds backing the cards to be held in an account administered by a trust company until redemption requires these funds to be transferred to the retailer who issued goods in return for the card.

The public should be able to purchase gift cards with confidence and the sure knowledge that they are protected by law.  This legislation is long overdue and it would be a shame if it suffered the fate bestowed by party politics.   So often, whatever is proposed by one side of the house is automatically rejected by whoever is in opposition, further complicated by third party legislators who have their own axe to grind.   This legislation deserves a better fate !