CHOICE membership

Expiry dates and other rorts on gift cards/vouchers


#1

The fact the so many gift cards/vouchers have an expiry date has been grinding my gears for years. I cannot see any logical explanation whatsoever, why a voucher, that has been paid for with cash and constitutes an interest free loan to the merchant, can expire at all. They have your money and you have nothing after the expiry date. How can it be that law makers can tolerate a system that allows this? Image if the reserve bank would print an expiry date on our banknotes and they would be worthless after that date. I can’t see the difference and I think it is a worthwhile issue for Choice to take up with the relevant authorities.


#2

I agree that pre-paid gift vouchers should not, in all fairness,have a use-by date. The merchant has the money for a voucher that reduces in value to the recipient as time passes. It’s quite obvious that the merchant is cynically relying on a percentage of these vouchers going past their use-by date.
Publicity from Choice to its members of a list of the merchants that use this would be helpful in order to bring them the bad publicity that could have an effect on their image to customers and to move potential customers to merchants that trade more ethically.


#3

I think all companies could operate like Bunnings does with their gift cards. No expiry, and the amount on the card, is the amount, no guessing. They give change by way of another gift card of lower denomination and change under $9.95, e.g: You have a $20.00 gift card to spend, and you purchase an item for $5.00, so you get a $10.00 gift card and $5.00 change. Easy and not so difficult.


#4

I understand your frustration. You paid for it: they should honour it.

But I can see a problem: If a small company issued a number of them, and they weren’t cashed in (say, people weren’t interested), they might end up being liabilities and de-value the company. So, it could make it harder for that business to trade in the future. However, I am not a business person.


#5

I cannot see the logic in your argument. Let’s say a small company sells 100 gift vouchers for $ 50. Company now has $ 5000 cash and a hundred customers who might or might not use their vouchers before they expire. How does this constitute a liability, devalue the company or for that matter have anything to do with the problem of expiration date of those vouchers?
Is not every voucher that does not get used a net profit for the company? It just boggles my mind that it is against the law to supply a faulty, a dangerous or the wrong product; but can be legal to take your money and not supply anything for it.


#6

I agree that monetary gift vouchers should have no expiry, or at least a lengthy expiry (12-24 months). The only problem I perceive with an open ended expiry would be cash-flow within the business - particularly if it is not a large business. But that cash-flow burden could easily be dealt with like other cash-flow issues (tax for example) - the business quarantines the gift card money until it is reconciled. The Bunnings example provided in this conversation seems like a fair approach for consumers and whilst they are obviously a very big player in the market, it would be an approach others should aspire to.


#7

Yes, however if they never expire: They have the cash as the asset but still owe the consumer the same value. Over time, the assets are absorbed by the running costs of the business but the liabilities accumulate. Maybe even at some point, the company becomes insolvent and cannot legally trade. Also, if they keep giving away vouchers, they end up stocking a load of products that are technically sold already.


#8

This grinds our gears, too! There’s currently a review of the Australian Consumer Law underway, and we made a submission that includes a recommendation to abolish gift card expiry dates.

You can read the full submission here - https://www.choice.com.au/shopping/consumer-rights-and-advice/your-rights/articles/consumer-law-review-2016


#9

In our small business we offer gift vouchers that show a six month expiry date. However we say to customers that the date can be extended if they call. They can do that as much as they like within reason. Sometimes we get a voucher presented that is years old and, agreeing with the basic idea that there is no justification for taking people’s money for no return, we always honour the voucher. Gift vouchers are excellent for business because they are encourage people to come to our shop and enjoy spending vouchers, people generally spend more than the voucher value, and the reality is that a percentage of vouchers are never presented, entirely the responsibility of the holders. We even keep a log of vouchers issued and tell people that if they lose them they can be replaced. The only good reason for a expiry date is to encourage customers to redeem the voucher in a reasonable time period. If we have sold tens of thousands of dollars of vouchers over many years of trading, and a significant percentage are not redeemed this is a liability on the business to supply goods to the value of those vouchers. Of course prudent management might suggest keeping all monies received for vouchers in a separate account until redeemed, but that is a complication that we don’t have and I’ve not heard of it in similar small businesses. Vouchers for us are a significant but small percentage of turnover.
The vast majority of of vouchers are redeemed and redeemed quickly and people seem to get great enjoyment from that use. A tiny few get forgotten, hoarded or misplaced for a while and there is no reason why they cannot be redeemed.


#10

Great to see that you do the right thing by your customers. I just find it a bit hard to swallow that argument about unused vouchers creating a liability. If a large amount of unused vouchers are redeemed years after issue and that creates a difficulty for a business, that is simply a result of poor accounting and not an acceptable excuse. I can understand that a business might not be happy to honour a voucher for a service, the value of which might have increased out of proportion. But when the voucher is strictly the equivalent of cash, restricted to be spend at a certain business, the advantage is strictly on the side of the business.


#11

I recently dealt with a website in the US. They stuffed up my order, and so to compensate, they gave me a gift voucher. The voucher doesn’t expire for 5 years, and every couple of months they send me a reminder to say “hey, don’t forget you have a voucher - here’s the code you need to use”. My main issue with gift cards is that sit around and get forgotten - I usually find them a week or two past their expiry. I don’t have a problem with them having an expiry, but 1 year is just ridiculous. And if you register the card, it would cost the company nothing to send you an email to say “we’re having a sale - come in and use your card”. I might even spend more than what the card is worth!


#12

Well maybe liability is the wrong word but burden it sure is. We have numerous examples of what YOU might call ‘poor accounting’, because we are a small business with limited resources and as systems become more complicated they tend to become more expensive in time and money, even with the use of computers, which themselves are a cost to buy, maintain, update and service.
So we encourage redemption, to limit the number of unredeemed vouchers ‘in the wild’, but they don’t actually expire, nor should they.
Whilst I agree that vouchers are good for our business, no one is forced to buy one and we get asked for them all the time so the shopping public like the idea of vouchers and the vast majority are quite comfortable with an expiry date. If they weren’t good for the business, including customer satisfaction as a measure, we would stop issuing them. Perhaps we should change the wording and call it a 'Best Before …'date!:slightly_smiling_face:


#13

I have “lost” significant" money (for me) in two cases, one the Expiry Date was not clearly visible, the other through putting off using a gift card until it was too late (by a matter of a few days, online help desk were indifferent to my entreaties to extend the life of the card)

Some cards are sold with a very short “life” - less than a couple of months in some cases

I can understand the “accrual” accounting practices, but that is just too easy an excuse

Lets have a more realistic approach to the “life” of gift cards


#14

You are right That is the correct accounting treatment.

This notwithstanding, I think it sends a bad signal about the company. I was recently given $60 worth of Gift Cards by Myers and they expired within ONE MONTH! I was travelling and could not redeem them, so I appear to have lost that “make good” gift. Hardly a “make good”!


#15

That is correct. Funnily enough there are many CFO’s who LOVE what they call “shrinkage” - i.e. expired gift cards/vouchers and also loyalty points.

As a customer-service focused CEO I say that “shrinkage” is BAD and is a sign that the marketing initiative involved is *[poll name=Richard-Warland type=multiple min=1 max=4 public=true]

  • How long is an acceptable expiry date for -

Gift Cards/Vouchers.
1 Year?
2 Years?
5 Years?
Never?
*

  • AND

Loyalty Points?
1 Year?
3 Years?
5 Years?
Never?
[/poll]failing!*


#16

Let’s try that again – I’m still getting the hang of the poll creator too.

How long is an acceptable expiry date for Gift Cards/Vouchers?

  • 1 Year?
  • 2 Years?
  • 5 Years?
  • Never?

0 voters

How long is an acceptable expiry date for Loyalty Points?

  • 1 Year?
  • 3 Years?
  • 5 Years?
  • Never?

0 voters


#17

Think of Gift Cards as cash. The Issuer gets cash and incurs a liability to deliver goods to the Gift Card holder. The issuer has the benefit of the cash and interest earned.

Now consider a Bank that receives cash deposited into a bank account and incurs a liability to deliver that cash to the account holder on demand. Does the Bank put an expiry date on the deposit, and would you deposit funds in a Bank if they did?


#18

All businesses are doing is losing money in the future because, as we can tell from all these responses, people no longer us this form of gifts, as we don’t intend losing any more money than we have already done. No more than what has already been said needs to be added, just that it is one of the worst scams out!


#19

I absolutely agree. I no longer buy gift vouchers for this reason. I feel it is dishonest. Retailers who engage in this practice I feel are taking advantage of an obvious loophole in consumer legislation.

This would be a worthy cause for CHOICE to pursue. It would certainly have my vote.


#20

This is a little old, but CHOICE looked at gift cards in 2014 (for Christmas). Our research (a poll conducted with over 700 CHOICE members) showed that 1/3 of people lost the full value of at least one gift card in the three years prior to the survey.

As Sarah has also referenced above, we’ve called for abolishing expiry dates. There are a lot more protections for consumers in this space in the US and companies have better processes in place (as @chill has mentioned) - probably because they’re ahead in the data game.

NSW Fair Trading also shadow shopped a number of major retailers back in 2012 (aptly named “Operation Gift Card”), and surprise surprise, the retailers didn’t do that well!