Australia’s gift card industry is worth up to $2.5 billion a year, with around 34 million gift cards sold annually, but the short, 12-month life span on most cards is a windfall for retailers worth up to $60 million a year in New South Wales alone.
But that’s about to change, with the country’s biggest state announcing changes that mean gift cards will have mandatory three-year expiry dates.
The state’s Better Regulation minister, Matt Kean, said up to 8% of card recipients don’t use the full balance before the card expires, and they’d become an “unwelcome headache” for shoppers.
“This means NSW consumers are losing tens of millions of dollars a year,” he said.
“We’ve had more than 1300 complaints about gift cards to NSW Fair Trading over the past five years – mostly about expiry periods and undisclosed terms and conditions.”
Kean estimated the change would give back up to $60 million a year to shoppers, announcing further reforms to stop the money being eaten up by extra fees and charges.
“I’m fed up of business taking money from shoppers and providing nothing in return,” he said.
“Our plan will also stamp out further gouging of consumers through post-purchase fees and charges that reduce the balance on their gift card.”
Kean said that legislation on the changes will be introduced to the NSW parliament following consultation with stakeholders, including retailer groups, but the Australian Retailers Association (ARA) says it “strongly” opposes the changes saying it was “red tape” that “will significantly disadvantage consumers” and hurt small business.
ARA Executive Director, Russell Zimmerman, said the change would place an “unnecessary regulatory burden and significant additional administrative costs” on retailers.
The ARA on behalf of the NSW Business Chamber (NSWBC), Australian Sporting Goods Association (ASGA), Franchise Council of Australia (FCA), Pharmacy Guild of Australia (PGA), and Restaurant and Catering Australia (RCA) all disapprove of the proposed reforms to NSW gift cards as previous Federal inquiries into the operation of gift cards have found no associated consumer benefit to altering the regulations.
“It is unreasonable to expect small retailers and family businesses to amend their administrative practices and incur extra liabilities on their books simply to respond to unnecessary regulation,” he said.
Zimmerman said the change would also create jurisdictional and competitive issues for the state’s retailers.
“This will restrict trade and competition between New South Wales and other states, and there is no means of monitoring the use of gift cards across borders,” he said.
The proposed changes come a day after the minister announced that the price of resold tickets to concerts and sports events in the state will be capped at 10% of the original purchase price.
This article was sourced from Business Insider Australia. Please click here to view the original article.