What You Need to Know Before the Holiday Season
The end-of-year holidays are FAST upon us and gift vouchers are the staple go-to presents for THOUSANDS of people, which probably means you’re about to get SUPER busy!
Gift vouchers are definitely a powerful way to promote your business at this time of year and can provide a fantastic cashflow boost. But BEFORE you ramp up your business in preparation, you need to know about the NEW LAWS on gift cards and vouchers in place from 1 Nov 2019 onwards.
(Note, this is for AUSTRALIA only…)
What are the main changes to laws on gift vouchers?
- The new Australian Consumer Law on gift cards state that any cards and vouchers sold ON or AFTER 1st November 2019 MUST have a MINIMUM three-year expiry period. Any cards or vouchers sold prior to 1st November 2019 will keep their existing expiry period and terms and conditions.
- All gift cards and vouchers MUST prominently display their expiry dates and date of purchase
- Post purchase fees on gift cards and vouchers are now banned (with some exceptions)
Why have the laws on gift vouchers changed?
Data has shown that we’re a PRETTY FORGETFUL nation when it comes to our gift cards, with a whopping $148 million lost on gift cards and vouchers that hadn’t been redeemed over a 12-month period. With businesses able to dictate ANY expiry period they wanted, things got a bit chaotic and led to millions of dollars wasted.
The new laws are being put into place to better PROTECT consumers purchasing or redeeming gift cards from losing out.
I get where the government is coming from with this… BUT while it might not make much difference to large companies it DOES make selling and honouring gift certificates MUCH more difficult for small business owners who might not have the systems or cashflow to carry voucher obligations long term.
What do businesses need to do as a result of the changes to gift voucher laws?
As a business owner, here’s what you need to do to comply with the new gift card laws:
- Ensure all gift cards purchased on or after November 1st, 2019 have a minimum three-year expiry period
- Clearly display the date of purchase and expiry date on your gift cards
- Update your gift card terms and conditions listed online, in promotions, or on the gift cards themselves
- Update any policies and procedures, training manuals, or internal documents that refer to your gift cards
- Display signage in the area of physical gift cards, or in their respective sections online indicating the main purchase information
- Ensure the details on receipts for gift cards reflect the new laws
- Ensure you are not charging any of the following (or similar) post-purchase fees for gift cards:
– Account keeping fees
– Balance enquiry fees; and
– Card/voucher activation fees
What are the penalties for a business that doesn’t comply with the new gift card laws?
There are some PRETTY HEFTY penalties for businesses found to be non-compliant with the new gift card laws.
A breach could cost up to a $30,000 fine for a body corporate, and $6,000 for individuals in business. Businesses could also face infringement notices from the ACCC of $11,500 for body corporates and $2,420 for individuals.
Where can I find more information on the new gift card laws?
There may be different state laws on gift cards depending on where your business operates, so it’s important to consult your state legislation as well as the new Australian Consumer Laws.
Check out this government PDF guide for an in-depth explanation of the new laws.
Okay so, literally, what does this mean for me? Can I even offer gift vouchers at all?
The short answer is yes, of course it’s still legal as long as you comply with the new rules.
However, it’s definitely tricky for a small business to manage a three year expiry on gift vouchers. Clients redeeming gift vouchers 3 years down the track when the payment you received for that has been well and truly spent, means that you might be shooting yourself in your future cashflow foot if you sell too many of them now.
Many therapists can’t even confidently plan that far ahead, not knowing if they will even want to be treating, or where they’ll be based, or what they’ll charge etc.
If this is you, you do still have the choice to offer the vouchers, and here are a few ideas to help you make it work smoothly:
- Put the dollar amount on the voucher (rather than “60 minute treatment”) because that way if you have a price rise or different business model in the future, clients can still redeem the voucher
- Keep the funds in a separate bank account until the vouchers are used – this way you can refund if needed
- Contact purchasers of the vouchers to proactively offer to book them in (aware that most vouchers are gifted to someone else so you’ll have a bit of complexity following this through)
- Always keep track of your voucher sales so you know how many are outstanding at any one point, and restrict your active voucher numbers to a level you are comfortable with
- If the voucher is at a significant discount it’s exempt so the expiry can be whenever you like (it’s seen as a discounted “promotion” rather than purely a voucher sale)
Okay, so not all of these ideas are particularly pleasant or practical, but if you’re planning to sell lots of gift vouchers this Christmas or Mothers Day the new laws mean you’ll need to have a few little systems in place to keep everything running smoothly.