Pre-paid cards come under scrutiny
Australia's A$1.5 billion gift card market may face tougher regulation in response to consumer complaints about variable expiry dates, restrictions on use, and fees that erode the cards' value.
The parliamentary secretary to the Treasurer, David Bradbury, said that as the gift card market (a sub-set of the prepaid card market) has grown fair trading regulators have received a growing number of complaints. The CCAAC has been asked to identify the precise level of consumer detriment under current gift card arrangements and to set out options to address any such detriment.
The most common consumer gripe is that different cards have different expiry dates. This causes confusion and results in cards expiring before the holder has redeemed the value. Some gift cards have conditions that prevent them from being used to make small-value purchases. Other cards have periodic fees that apply to the outstanding balance, which can erode the value of the card over time.
Terms and conditions can change if the card issuer is insolvent. In one recent case, the administrator required card-holders to spend an extra amount for every dollar redeemed.
Source: Banking Day