- Why is the government regulating gift cards?
- Will the legislation apply to gift cards issued before the Act came into effect on June 18, 2008?
- Does the Act apply to prepaid phone cards?
- Can a gift card have an expiry date?
- What happens if a gift card has an expiry date on it?
- What fees are allowed under the legislation?
- When may dormancy fees be charged?
- What happens if an illegal fee is charged?
- What information must be disclosed on a gift card and in what format?
Are the disclosure requirements different for multi-store cards?
1. Why is the government regulating gift cards?
The purpose of the Gift Cards Act is to ensure that consumers get what they paid for; that is, the value of a gift card is not reduced or eliminated due to service fees or through expiry dates. Expiry dates have been prohibited with some exceptions, and fees are restricted under the Act.
2. Will the legislation apply to gift cards issued before the Act came into effect on June 18, 2008?
No. The regulations apply only to gift cards bought on or after June 18, 2008. Consumers are advised to keep their receipts as proof of date of purchase.
3. Does the Act apply to prepaid phone cards?
No. The Act does not apply to prepaid phone cards because they fall within the jurisdiction of the federal government. Prepaid purchase cards issued by a financial institution with credit card logos or branding also fall under federal jurisdiction.
4. Can a gift card have an expiry date?
Expiry dates are prohibited, except in the following circumstances:
if the card is issued or sold for a specific good or service: The prohibition on expiry dates does not apply to cards issued for a specific product or service (for example, a manicure or a facial). Retailers are not expected to make the same product or service available at the same price indefinitely;
- if the card is issued for charitable purposes: retailers and other businesses offer these types of gift cards to charitable organizations to help them raise money, and it is reasonable that they are time-limited; and
- if the card is issued for promotional purposes: A card that is given away as a prize or sold to consumers at a discount is not prohibited from expiring.
5. What happens if a gift card has an expiry date on it?
Some stores may choose to use up remaining cards that have expiry dates on them. If there is an expiry date on a gift card in violation of the Act, the card remains in effect as if there were no expiry date.
6. What fees are allowed under the legislation?
Fees are not permitted under the Act except in the following circumstances:
7. When may dormancy fees be charged?
The regulation allows for a monthly fee of up to $2.50 if the card has been inactive for 15 months. Consumers may, in the 15th month, request a three-month extension, giving them up to 18 months to use the card without penalty.
8. What happens if an illegal fee is charged?
If a fee is charged in contravention of the Act, the consumer has the right to demand a refund by giving written notice to the issuer within one year of the date the fee was paid. The issuer is required to provide the refund within 15 days of receiving the notice.
9. What information must be disclosed on a gift card and in what format?
All restrictions, limitations and conditions with respect to the use, redemption or replacement of the gift card, including any permitted fee or expiry date, must be provided in writing, in a manner that is likely to bring it to the attention of the cardholder.
10. Are the disclosure requirements different for multi-store cards?
Yes. In addition to the disclosure requirements listed above, the issuer of a multi-store card must also include:
a prominent notice on the front of the card indicating that the back of the card contains information about the fees; and
information on the back of the card clearly describing the amount payable for such fees and the number of months that must elapse for the fees to apply.