Fair Trading (Gift Cards) Amendment Bill

Second Reading

The Hon. R.I. LUCAS (Treasurer) (16:33): I move:

That this bill be now read a second time.

I seek leave to have the second reading explanation and the explanation of clauses inserted in Hansard without my reading them.

Leave granted.

The Fair Trading (Gift Cards) Amendment Bill 2018 ('the Bill'), amends the Fair Trading Act 1987 ('the Act') to require that any gift cards sold in South Australia (SA) must have a minimum expiry date of three years.

The Government has committed to making gift cards more consumer friendly, by ensuring that any gift cards sold in SA have a minimum three year expiry date. The proposed amendments also contribute to the Government's priority of reducing red tape and modernising regulation.

The Bill seeks to address the detriment and financial loss experienced by people who purchase or use gift cards. According to consumer advocate group, Choice, Australians spend approximately $2.5 billion each year on gift cards. An estimated $200 million of that is lost in unredeemed gift cards. As the e-commerce market grows, the use of online e-gift cards has also increased.

The terms and conditions of gift cards vary greatly, with the timeframe of expiry dates typically ranging from three to over 12 months. However, consumers often do not have sufficient time to redeem the full value of a gift card and there is a perception that the system as a whole is inconsistent and unfairly favours businesses. Some larger companies such as Apple and Bunnings have set a higher standard by offering gift cards with no expiry, whereby consumers can consider the credit similar to cash.

On 31 March 2018, similar reforms commenced in New South Wales (NSW), mandating a minimum three year expiry date for gift cards. The NSW reforms were widely supported for providing a fair balance between the rights and obligations of consumers and businesses.

The NSW reforms prescribe a number of categories of exemption, including loyalty or reward programs, temporary marketing promotions and vouchers supplied for charitable or fundraising purposes. Subject to the passing of the Bill through Parliament, targeted consultation will be undertaken to prescribe similar exemptions in SA by regulation.

Due to the fact that jurisdictions must adhere to free trade, the proposed SA amendments are limited in the same manner as the NSW reforms with respect to online and over the phone purchases where the gift card is delivered to an address outside of SA or where the consumer's contact details include a residential address outside of SA.

The Federal Government is currently investigating the feasibility of national reforms that would bring all jurisdictions into line with NSW. In the meantime, there is great value in SA adopting reforms that are consistent with those recently introduced in NSW, to minimise varying and complex regulation across the jurisdictions.

These reforms will streamline the diverse practices of businesses and achieve greater confidence, consistency and fairness for consumers. The impact on business is anticipated to be negligible and transition costs are likely to be minimised for larger businesses already operating in NSW.

I commend this Bill to Members.

Explanation of Clauses

Part 1—Preliminary

1—Short title

2—Commencement

3—Amendment provisions

These clauses are formal.

Part 2—Amendment of Fair Trading Act 1987

4—Insertion of Part 6A

This clause inserts Part 6A which consists of section 45D.

Part 6A—Gift cards

45D—Prohibition on sale of gift cards with expiry date of less than 3 years

Proposed subsection (1) makes it an offence for a person to sell a consumer in South Australia a gift card with an expiry date that is earlier than 3 years after the date of sale of the gift card. Proposed subsection (2) makes it an offence for a person who sells a gift card to a consumer in South Australia, or who has agreed with the seller to redeem that gift card, to impose an administrative charge or fee that reduces the redeemable value of the gift card after the sale of the gift card. In each case the maximum penalty is $5,000.

Proposed subsection (3) provides that a term or condition of a gift card sold to a consumer in South Australia is void to the extent that it would make the sale of the gift card, or the imposition of a charge or fee, an offence under section 45D.

Proposed subsection (4) provides that if the expiry date of a gift card is void because of subsection (3), the expiry date is to be taken to be 3 years after the date of sale of the gift card.

Proposed subsection (5) excludes from the operation of the section—

a gift card sold to a consumer before the commencement of the section; or

a gift card sold to a consumer online or by phone where the gift card is to be delivered to the consumer at an address that is outside South Australia or the contact details of the consumer provided in connection with the sale of the gift card include a residential address that is outside South Australia; or

a gift card of a class prescribed by the regulations; or

a gift card sold to a person, or person of a class, prescribed by the regulations; or

a gift card sold in circumstances prescribed by the regulations.

Proposed subsection (6) defines the terms expiry date, gift card and redeemable value.

Debate adjourned on motion of Hon. T.T. Ngo.