Retailers association hits out at “significant cost” of transition to three-year gift card expiry in NSW

The Australian Retailers Association (ARA) says businesses in New South Wales stand to incur a “significant cost” to get their systems up to date within six months to comply with new three-year gift card expiry terms in the state.

In a submission to New South Wales Office of Fair Trading, the ARA’s executive director Russell Zimmerman says plans to introduce the changes in March with a six-month transition period will represent a “significant hit to retailers leading into the busy Christmas trading period”.

Last year, the NSW government announced its plan to introduce legislation to standardise gift card expiry terms to three years from the date of issue in the state, saying too many shoppers are losing out by failing to redeem their cards within the one-year expiry period.

However, the peak body for retailers says there’s no “needs-based” evidence to suggest the legislation should be a priority, warning that with the new laws set to be phased in between March and September, many retailers will have to quickly update their stock and ensure the gift cards and systems they already have are compliant with the new rules.

“The retail industry would prefer a voluntary code of conduct on these gift card regulations as placing an unnecessary regulatory burden will only cause more administrative costs and confusion for both retailers and consumers,” Mr Zimmerman said in a statement to SmartCompany this morning.

“The ARA have been advocating for a 12-month transition period to assist retailers with this new unnecessary regulatory burden, as the majority of retailers are already carrying excess stock of gift cards.”

In its submission on the phasing in of the changes, the ARA also says the legislation refers to the new rules only applying when a card is sold to a “New South Wales resident”.

This is confusing for retailers because they often sell products to customers from across Australia.

“The ARA is concerned about the onus placed on retailers for asking for and checking identification of consumers purely for the sale of a gift card or voucher, particularly when issued from interstate,” the group said in its submission.

The New South Wales government says when the three-year terms come into play on March 31, customers in the state will be $60 million a year better off because they will have longer to redeem card purchases.

“This is all about putting consumers first and I call on businesses to put their customers first by extending expiry dates across the country,” the state’s minister for regulation Matt Kean said in November last year.

Some businesses have jumped to offer longer gift card terms for customers early, with Shark Tank investor and RedBalloon founder Naomi Simson announcing RedBalloon would extend vouchers to three-year expiry terms for all vouchers sold after October 18, 2017, right across Australia.

“We’re making this change because we think it offers great value to our customers,” Simson said at the time.

However, she observed that while RedBalloon was able to make a swift move to update its systems, there were concerns many small businesses would struggle to update their processes in time for the change.

“RedBalloon is in the fortunate position of being able to make these changes and wear the financial and resource costs required to do so — but that is the not the case for all,” Simson said in a statement in November.

Calls to make rules national

Council of Small Business Australia chief executive Peter Strong tells SmartCompany his members are not worried about the prospect of extending expiration dates to three years, but they are concerned the rules are confusing and there could be costs to compliance.

“What’s been mentioned to me by a couple of people is that the rules seem like a mess,” Strong says.

“Complexity leads to confusion for staff.”

Rather than having different card expiry terms in each state, Strong says this should be an easy matter for the Council of Australian Governments to agree on and a national standard term should be put in place on the issue.

“That would be much more sensible — get all states to say, ‘these are the rules’,” he says.

Will the extension of gift card expiry dates in NSW affect your business? Email us at news@smartcompany.com.au to tell us more. 

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