A Legal Change to Gift Cards.

The wise avoid gift choices when the recipient is a teenager.  It is better to give money because we rarely get the choice of either music or clothing right and that can be embarrassing for both parties. Unfortunately, for some strange reason handing actual cash as a gift to a close adult friend or relative is seen as socially gauche.  For that reason, it is usually disguised by being in the form of a gift card.

Unfortunately, the statistics on gift cards are not promising.  A significant number get tucked away and forgotten - and are never used.  Many of the ones that are used have a few dollars left as a credit balance that is not reclaimed.  Many merchants impose unreasonable use restrictions on gift cards that do not correspond with government trading laws, and in recent years most gift cards have had a twelve month time expiry imposed.

A gift card is merely a substitute for cash.   The buyer lodges the cash with a third party and when the card is presented in a shop, the merchants is reimbursed in full for whatever goods were chosen by the recipient. There is no legal right to impose restrictions on their use.

Some stores claim that gift cards can not be used to purchase items already price reduced in a sale, but this contradicts trading laws - and is a sheer bluff.  Fortunately, the New South Wales government has revised the laws that apply to gift cards and one of the main impediments to their use has been extinguished.  That twelve month expiry date has been broadened - to a full three years from date of issue.

That applies to all and any cards issued after March 31 of this year, consequently cards that may have been gifted this past Christmas and which have a twelve month expiry date will not be affected by this law change.

Some consumer groups are calling for a more extensive revision of gift card use to be written into law.  It is suggested that when a purchase leaves a few dollars remaining on the card balance that this be reimbursed in cash rather than require another purchase for elimination.   In many cases the shop offers nothing near that value and to reclaim the balance the customer must make a significant other purchase with their own money.  It is suggested that amounts less than ten percent of the card value be treated in this way.

Another anomaly is where the gift card only applies to a particular merchant.  Most cards are " open " and can be used anywhere while others apply to a selected range of stores, but those with heavy use restrictions lose their purchasing value if that particular store closes and ceases trading.   This was illustrated when the Dick Smith electronic stores went into receivership and the receiver refused to honour gift cards.

This law change is heading in the right direction, but has a long way to go.  When a gift card fails to get presented and its value reclaimed that money becomes a gift to the card company that issued the card.  There seems no reason why the person receiving such a card as a gift could not reclaim that gift in cash from the card company, because it is simply a gift in a different form to cash.

The opportunity exists to clear away this mess.  It seems that shops have imposed their own rules on gift card use and the card companies imposition of an expiry date has been a recent measure.  A law change to clear away all impediments to use would be helpful.