Start-ups put on festive notice following gift card warning

Start-ups planning to offer gift cards this Christmas have been urged to include all the necessary information, after NSW Fair Trading Minister Anthony Roberts issued a warning to consumers over misrepresentation.

Roberts issued the warning after an investigation found many gift vouchers don’t contain basic information such as expiry dates.

NSW Fair Trading says it received more than 200 complaints relating to gift cards, gift vouchers and certificates in 2011.

Most complaints related to misrepresentation about how to redeem the card and how to arrange a replacement or refund if a card is lost or stolen.

The current investigation looked at 28 gift cards from online businesses, major stores and a cinema. Less than half of the cards included information such as the value of the card, expiry dates, and terms and conditions.

This is despite the fact that Australians spend an estimated $2.5 billion on gift cards each year.

According to retail guru Deb Templar, who heads up The Templar Group, gift cards are an ideal way to spark Christmas sales because they can be “drawn up quickly”.

But according to a report released last year by the Commonwealth Consumer Affairs Advisory Council, the gift card industry is fraught with inconsistencies.

The report said the gift card “system” has become flawed as retailers compete to offer “more attractive branded gift card products”.

“The person who experiences these difficulties is not usually the person who purchases the gift card,” the report said.

“This raises a number of issues with respect to the ability of retailers to clearly disclose important information to the person who will ultimately receive the gift card.”

“It is also arguable that some terms and conditions are onerous for consumers, and not reasonably necessary to protect the trader’s legitimate commercial interests.”

Issues relating to terms and conditions include expiry dates, restrictions on low value use, terms and conditions in the event of insolvency, and fees and charges.

But according to Russell Zimmerman, executive director of the Australian Retailers Association, there is little evidence of significant consumer issues around current practices.

“Most gift cards are redeemed shortly after purchase,” Zimmerman said in a statement.

“In the current self-regulated environment, gift card issuers already offer grace periods and flexibility with gift cards as part of their customer service policies.

“Retailers enjoy being able to offer a solution for their customers in the way of a gift card.

“Most are able to come to a win-win solution when an issue arises, which is exactly the same as with the purchase of any other product.”