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Offering different payment options for your customers gives them greater choice and flexibility. One of these payment options that you may offer is gift cards that customers can pre-purchase and use at a later point. However, if you want to include gift cards as part of your potential payment options, ensure you offer them legally and fairly. Otherwise, you run the risk of increased customer complaints and, in some cases, legal consequences. Therefore, this article will explain various legal obligations when selling gift cards in New Zealand.

How Gift Cards Work

Gift cards are a common alternative payment option to credit cards or cash that many businesses offer in New Zealand. These are cards that customers can purchase and pre-load with a specific amount of money. Then, they can use this gift card at later date to purchase your goods or services for an amount up to what they pre-loaded. 

You may offer gift cards for your own goods or services or have an agreement with other businesses to accept a gift card that applies across your network.

If the customer does not spend the full amount on one item, they can come back and use the rest later. Following this, gift cards exist as a binding contract between you and the customers that purchase them. For example, you may offer gift cards for specific amounts, such as $20, $50, and $70 gift cards. Customers can then purchase those cards for those amounts and redeem them at a later date.

Notably, gift cards operate differently from customers offering cash because you will be able to set various terms and conditions that govern how customers can use them. Therefore, you will need to set out any restrictions or limitations on what goods or services that customers can purchase with the gift cards you offer.

Informing Customers of Your Gift Card Requirements

As a lasting contract between you and the customers that purchase them, you can set your own requirements for how customers can use the gift cards you offer. Indeed, you need to take reasonable steps to ensure customers know about these requirements. For example, consider displaying a gift card policy or terms and conditions document. 

Additionally, a gift card policy may include clauses covering:

  • where customers can purchase and use valid gift cards;
  • whether customers can top up their gift card balance;
  • what customers cannot use gift cards for;
  • whether customers can redeem the card for cash at any point;
  • any warranties or indemnities;
  • any privacy concerns;
  • maximum and minimum values;
  • details of expiry dates; and
  • whether you will replace/refund lost or stolen gift cards.

Notably, consumer law, such as the Fair Trading Act, will apply when you are selling gift cards. Therefore, you must not:

  • mislead your customers about how they can use gift cards;
  • set unfair terms in your gift card policy;
  • make any untrue claims about your gift cards; or
  • mislead customers about their consumer rights.

As a result, clarity around the terms and conditions for your gift cards is essential. If you are dishonest in your dealings, you risk facing penalties, including fines up to $200,000 for individuals and $500,000 for businesses.

Meeting Expiry Dates

A point of contention around gift cards surrounds expiry dates and whether you have to honour the card if a customer comes with one past its expiry date. If your card has a clear expiry date, then that card is not valid past that date. Therefore, a customer cannot use that card to purchase your goods or services unless you allow them to.

However, if your card has no expiry date, customers can use that card whenever they want.

To avoid misunderstandings, you should clearly print the expiry date on the card itself. That way, you can be sure that you do not mislead customers about the existence of an expiry date.

Replacing Lost Gift Cards

If a customer loses a gift card, you are under no obligation to replace it. However, you may consider allowing this in certain cases, such as when the card only applies to that customer and is not transferable to anyone else. Further, ensure you have confirmation that the customer bought the gift card from you in these cases.

You may consider charging a fee for supplying replacement gift cards.

Key Takeaways

When you sell gift cards to customers, this creates a different kind of contract than a normal transaction. Therefore, you should set out your gift card requirements in a policy or terms and conditions document to avoid any misunderstandings with customers. For more information or help with the legalities of selling gift cards, contact LegalVision’s regulatory and compliance lawyers on 0800 005 570 or fill out the form on this page.

Frequently Asked Questions

Do I need a gift card policy?

If you offer gift cards for your business, you should detail your requirements in a gift card policy or similar document. Your gift card contracts will have different conditions than everyday transactions, so you need to inform customers of these.

Can gift cards expire?

If you put an expiry date on your gift cards, then they expire on that date. However, if you do not detail an explicit expiry date (or card duration), customers can use them whenever they wish.

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