New gift card regulations present a challenge to retailers

New Zealand retailers have raised concerns over legislation mandating that all newly issued gift cards must have a minimum expiry period of three years.

Industry representative Retail NZ has suggested that the rules may create confusion for both retailers and consumers and is requesting changes. Recent guidance issued by the Commerce Commission clarifies the definition of a gift card and specifies when it is considered sold.

Retail NZ CEO Carolyn Young noted that members have repeatedly asked which cards are covered by the new laws, emphasising the broad range of cards impacted.

“While we are grateful for the guidance the Commerce Commission published late last month in response to our many queries, some of the interpretations are not what our members were expecting, ” she said.

Late last year, industry representatives in Australia warned about the unintended consequences of recent changes to the local anti-money laundering and counter-terrorism financing regime, particularly as it concerns gift cards.

"Retail NZ believes neither of these scenarios was intended to be included in this Bill, which is about ensuring consumers have a fair amount of time to spend gift cards bought for them by friends."
Carolyn Young, Retail NZ

Returning to New Zealand, Young stated that the change creates compliance challenges and increases financial pressure on small and medium-sized businesses during difficult economic conditions.

“Small businesses with these cards often feel they must apply expiry dates to keep their liability in check,” she said.

“What has also caught some of our members by surprise is the inclusion of bonus gift cards given out with the sale of a specific item. While retailers maintain they are given for free alongside a purchase, the Commission has deemed that they are part of the sale of the product and must now comply with the expiration rules.“

“Retail NZ believes neither of these scenarios was intended to be included in this Bill, which is about ensuring consumers have a fair amount of time to spend gift cards bought for them by friends.”

The group is seeking amendments to exclude these cases and is in discussions with the Commerce Commission and the Government.