Government approves General Scheme of Bill to standardise Gift Voucher fees and expiry dates

The Government has recently approved the general scheme of the Unfair Contract Terms (Gift Vouchers) Bill 2018 (the general scheme) which was brought forward by Heather Humphreys, the Minister for Business, Enterprise and Innovation (the Minister).

Main proposals

In the general scheme, the Minister makes two main proposals:

1. Gift vouchers must be valid for a minimum term of 5 years; and
2. The Minister will have power to make Regulations to set fees for the issue and replacement of gift vouchers and for ‘inactive balances’ (commonly referred to as dormancy/maintenance fees) on gift vouchers.

Current situation 

Currently, there is no regulation of expiry dates of gift vouchers and there is no specific legislation dealing with gift vouchers, although gift vouchers supplied to consumers are subject to the provisions of general consumer protection legislation.

Types of gift voucher

There are 2 main types of gift vouchers available to Irish consumers - the closed loop gift voucher and the open loop gift voucher. Closed loop gift vouchers can only be used to buy goods or services in the business which issued it. Many small businesses would issue closed loop gift vouchers. Open loop gift vouchers can be used to buy goods or services from a number of different retailers and service providers. Examples include One4All vouchers and gift cards redeemable in the outlets in a particular shopping centre.

Expiry dates and other restrictions

At present, retailers are free to determine the expiry dates of their gift vouchers, with some expiring after as little as 6 months - or even less than that. Retailers can refuse to give change (even in voucher form) for a purchase below the value of a gift card. Retailers can also refuse to accept vouchers during sale periods. Most gift voucher issuers do not replace lost or stolen gift vouchers.

Inactive balances

Inactive balance or dormancy fees apply mostly to open loop gift vouchers and usually commence after 12 months from the issue of the gift voucher. The fees charged vary greatly and range from €1.45 to €3 per month. Dormancy fees can have a significant impact on the monetary value of gift vouchers if they are not spent within the first year.

Issuing fees

Charges for issuing gift vouchers also vary from retailer to retailer. The issuers of open loop gift vouchers may  charge a fee for the issue of a gift card and a smaller fee for each additional card, if more than one is being purchased at once.

Public consultation

The Minister has launched a public consultation, seeking input from consumers and businesses on gift voucher fees and the proposed expiry date provision. Submissions should be sent by close of business on Friday 31 August 2018.  For more information, please see here a link to the public consultation page on the website of the Department of Business, Enterprise and Innovation.