The gift card quickly established itself in the world, both among consumers and brands’ strategies. More, its digital version has brought this market to another stage of growth. Functions have expanded and uses have multiplied.
However, a regulation exists in order to frame practices. A regulation that will change over time as the gift card evolves.
Each country has implemented guidelines to follow if a brand or a company wishes to open its own gift card service. Let’s take a look at the different laws.
Note: Here we only talk about the law which frames gift cards. Rules aren’t the same for boxes or travel packs, for example.
Rules around the gift card in Europe
At the European level, instructions about the gift card market are given but, despite a common base, each country has its specificities.
The buyer who wishes to offer a gift card and the holder must have been informed about the conditions of use before purchase. For example, the brand must explain clearly the way the card can be spent, how the remaining balance can be verified…
Of course, the spendable amount needs to be on the card as well as the expiration date. Also, the buyer or the holder must be able to quickly access the general terms and conditions of sale.
Interconnection between European countries
Since the end of 2018, every European inhabitant is free to buy from an e-commerce website located in a country other than his own. It is what we more commonly refer as the end of geo-blocking. It means that a French person can order a gift card on a German e-commerce website if he wants to. However, the gift card will only be spendable in stores and on the website of the country from which it originated. For example, if we buy a card on the German L’Occitane en Provence’s website, the holder will only be able to spend on de.loccitane or in the shops located in Germany.
Fees around the card
In Europe, fees regarding the card activation or its use are forbidden. The same rule applies to replacement costs when the request comes from the merchant himself. The holder can therefore use its gift card in several instalments without incurring additional charges, for example.
The validity period differs strongly within the European Union. Countries usually impose minimum periods of validity and leave the choice to the brands to set up a longer period if they want to. Countries imposing a maximum duration are rarer.
Here is a summary list:
- In Italy, there is no duration established.
- In Estonia and Denmark, cards must have a minimum duration of 3 years.
- In Germany, the minimum duration is also 3 years but some brands decide not to use it at all.
- In Greece, the card is valid from 3 to 6 months.
- In Latvia: from 6 to 12 months.
- In Hungary: minimum duration of 5 months.
- In the Netherlands, it is valid for a minimum of 5 years and if the date isn’t written on the gift card, it is valid indefinitely.
- In Austria, if no validity date is mentioned, the card is valid for 30 years.
- In France, a minimum duration of 1 year is established. However, some brands go further: 2 years for Decathlon gift cards, 3 years for Zara and even 10 years for Amazon.
Extension or refund
Once the gift card has expired, the recipient of the card usually does not have the right to ask for a refund or to extend the duration. However, some brands may allow it in their terms and conditions of sale or in exceptional cases.
Exception: In Denmark, the refund of gift cards is allowed for the year following the expiry date.
Right of withdrawal on the gift card purchase
For the purchase of gift cards as for the purchase of any other items online, the European Union has put in place a right of withdrawal of 14 days from the date of receipt. However, there are many exceptions.
Special case of Ireland
Since December 2019, Ireland has introduced new rules regarding the gift card.
The idea of not refunding a recipient who has lost his or her card or whose card has expired is maintained, leaving the choice to the brand in its conditions of use and on the application of fees where appropriate.
However, the country sets the minimum validity at 5 years and both the purchaser and the cardholder will have to be informed of the expiry date in a durable format.
It prohibits issuing brands from forcing recipient to spend everything at once.
No fees should be charged if the buyer wishes to change the recipient’s name.
One of this new regulation’s particularities is the remaining balance of the gift card. If after a purchase with it, the balance is higher than €1, the recipient can ask for a refund (by cash, bank transfer…).
UK cards regulation
In the UK, the buyer is essential as if there is any problem with the card, it will be his responsibility to take care of it. The recipient will have to go through him to enforce the terms and conditions of sale established during the transaction.
Moreover, those have to be clearly noticeable and identifiable, otherwise the buyer will be able to enforce his right.
There is no specific rule regarding the expiry date. Brands can decide for themselves as long as it is clearly written.
In terms of theft or refund, the UK is in line with what is said in Europe, that is to say that the brand is not required to refund in the event of theft, nor to exchange the remaining balance for cash, for example.
Canada cards regulation
In Canada and more specifically in Quebec, there is no expiry date on the gift card. An issuing brand that implements an expiry date for its card must be able to provide a new gift card to a recipient whose card has expired and the balance not been fully spent.
They allow additional costs (for issuance, personalization, packaging, shipping etc.), but these must be clear and identified by the buyer in advance.
There may even be usage fees if the card is valid in several shops, for example.
The regulation states that if there is a less than $5 balance on the card, then the recipient can ask for a refund of the remaining amount.
Card laws in the United States
In the United States, the regulation is done at two levels. At the national level, it is done by the Credit Card Accountability Responsibility and Disclosure Act (CARD Act). It allows to define a basis for the coherence of the different regulations of the different states regarding gift cards but also prepaid cards.
In any case, as far as gift cards are concerned, this law states that the minimum expiry period of a card is 5 years.
Moreover, there may be activation fees but these have been limited. Fees on the use of the card can be active only after one year of inactivity. This is called dormancy fees. Post-sales fees can’t be cumulative over a single month. That is to say that issuing brands can’t activate multiple after-sales fees per month. They are limited to one.
In any case, fees must be written clearly on the card or its packaging.
Apart from these few lines, a large majority of the rules differ from state to state.
For example, in California, both dormancy fees and expiry date are prohibited. Also, if the card’s remaining balance is less than $10, recipients can exchange it for cash.
But it is not the case in Texas or in Florida for example.
Gift cards case in Australia
As in the US, regulation is done at two levels here. At the national level, some points should be kept in mind:
- The minimum expiry period is 3 years.
- After-sales fees are prohibited (investigation or account maintenance fees for example) with some exceptions (theft or loss fees, foreign transaction fees etc.).
- Initial charges at the time of purchase are allowed.
- The expiry date has to be written clearly and in full on the gift card. Otherwise, the date of purchase and the period can be written.
For example, we can write “Purchased August 15, 2020 and valid for 3 years”.
And if there is no expiry date, this must be clearly displayed on the card.
- Once the expiry date has passed, the brand is not obliged to refund the recipient.
More details on the regulations for each state can be found on the Australian government website.
Gift card rules in India
Regarding India, where gift card is starting to take off, some rules have been implemented.
For example, the amount on the card must be between INR 500 and INR 50 000 (i.e. between €5,76 and €576, 48).
The expiry date must not exceed 3 years and if there is a remaining balance, it cannot be refunded unless the brand decides otherwise. Fees could also be added.
Suggestions for further reading
How to launch an international gift card program ?
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