On 18 October 2017, the NSW Government passed the new gift card laws, meaning that NSW businesses will be required to extend the expiry date of gift cards sold in NSW to three years or face penalties of up to $11,000. The commencement of the laws were delayed after the NSW parliament voted down a proposed 1 December 2017 commencement date following concerns raised about the implementation of the laws and the impact on business over the busy Christmas period.
In response to the swift implementation of the NSW gift card laws, and the lack of industry consultation prior to introducing the new laws, ADMA held roundtable consultations on 19 October 2017 with its members and other industry stakeholders to discuss the impact of the new laws on businesses.
The roundtable highlighted that there is a lot of uncertainty for how businesses that operate online and nationally will comply with these laws. Consumers will also be left confused as some gift cards will have a three-year expiry period, and others will not. This confusion will erode customer engagement and experience – paramount for business today. Further, many businesses – particularly smaller ones – may not have the systems in place to comply with the new laws.
Some other concerns raised by members during our consultation included the following.
Impact on business
The time, resources and investment needed from a systems and logistics perspective to ensure compliance is concerning, as is the impact on businesses, especially small businesses. They may experience adverse impacts on cash flow and stock-take, in particular, those that issue vouchers and gift cards for experiences– in three years the cost of experience can rise significantly. In addition, concerns were raised about the viability of promotional campaigns that use gift cards or vouchers to drive demand in off-peak or slower parts of the year.
Lack of clarity
A number of elements of the new law need more clarity, including transitional arrangement - particularly in relation to existing gift cards in the market; application in the B2B sector; what is meant by the term ‘loyalty program’; and whether these laws apply to employee programs.
Sufficient time for compliance
A sensible commencement date is vital to ensure businesses are able to comply with the new laws and guarantee good customer experience.
In November, ADMA attended a meeting with the NSW Government to discuss these issues and identify a suitable commencement date for the new laws. ADMA raised significant concerns about the practicality of compliance with the new laws and advocated for the need to have sensible transitionary arrangements in order to ensure the best customer experience and the ability for businesses to comply with the new laws.
Following the concerns raised by ADMA the NSW Government has delayed its decision on the commencement date, initially set to be made on 3 November 2017, and is further consulting with ADMA and industry in relation to implementation issues. ADMA is actively working with the NSW Government to ensure the implementation of the new laws is smooth so as to ensure a better customer experience. ADMA continues to advocate for a 12-month transitionary period, with the view to reaching industry compliance by next Christmas.
It is worth noting that, based on our current discussion with the NSW Government, it appears that the laws will likely commence in April 2018. ADMA will continue to advocate for a sensible transitionary period and commencement date, as well as for the expansion to the exemptions to include gift cards for experiences, subscriptions, and B2B transactions where the gift cards are used as part of promotional, loyalty or employee programs.
NSW gift card laws
The NSW gift card laws include:
- a prohibition on, and fines for, selling a gift card or voucher that is redeemable in NSW, with an expiry date of less than three years
- a prohibition on, and fines for, imposing administrative charges or fees for redeeming gift cards that reduces the value of the gift card or voucher;
- other debit or credit ‘gift cards’, such as the visa prepaid gift card, are exempt from the laws;
- gift cards supplied in connection with loyalty programs are exempt from the laws