South Australia is the latest Australian state to change gift card expiry dates, after New South Wales ruled to extend minimum expiry dates for gift cards from 12 months to three years.
The South Australian government is following suit, having recently passed an amendment to the state’s Fair Trading Act to prohibit selling gift cards with less than a three-year expiry period. Businesses that are found to be selling cards with shorter expiry dates will be subject to fines of up to $5,000, under the changed rules.
The legislation, which has been passed by the SA Parliament, would also impose $5,000 penalties on businesses that impose a charge or fee that reduces the redeemable value of the gift card post-sale.
These laws would not apply to ATM, reloadable credit cards, or cards redeemable for specific digital credits such as iTunes cards. There are also exemptions for gift cards purchased online or over the phone when the gift card is to be delivered to an address outside of the state or when the purchaser lives outside of the SA.
Additionally, the government is proposing the rules should not affect cards provided to consumers in exchange for returned goods, customer loyalty cards, or cards linked to temporary marketing promotions. Public consultation on the proposed exemptions is open until July 20.
In a statement, the state government said the changes are intended to reduce situations where consumers feel pressured to make purchases simply due to a “looming expiry date”.
“It also reduces the financial loss experienced by consumers who do not redeem their gift cards at all, simply because they have been unable to find something that they wish to purchase within the period of time that the gift card is valid,” it said.
Expired gift cards reportedly cost Australian consumers approximately $200 million a year. Since NSW’s ban, numerous retailers have scrapped expiry dates on their gift cards entirely, including Woolworths, JB Hi-Fi, and Apple.
Meanwhile, the federal government has been investigating whether Australia should scrap gift card expiry dates altogether.
But despite being proposed as a win for consumers, some believe longer gift card expiry periods actually put customers at a disadvantage.
Writing for SmartCompany, customer behavioural specialist Bri Williams said studies out of the US showed customers provided with longer to redeem a gift voucher had a significantly lower rate of redemption than those provided with shorter expiry dates.
“According to the researchers: ‘people given a longer timeframe are more positive about and expect to be more likely to complete the enjoyable task, but are actually less likely to do so’,” Williams wrote.
“For gift cards, that suggests that people will love the idea of three years to use their voucher, but will be less likely to actually do so.”