ACT retailers pocketing $7m as gift-card owners short-changed

Noel Towell April 14, 2012

Canberra's retailers are pocketing up to $7 million by not offering shoppers full value on gift cards and other vouchers, according to the ACT government.

Attorney-General Simon Corbell says he will move to reform the laws governing the use of gift cards and vouchers so shoppers will not be ''short changed'' by retailers.

The retail lobby said yesterday it would support reform around gift cards but warned there were risks in unilateral reform across all states and territories.

Mr Corbell said many shops were refusing to give change when an amount was spent that was less than the face value of the card or voucher.

He cited research from consumer group Choice that found consumers were failing to receive nearly 25 per cent of the value of their vouchers when shops refused to give change.

''While there is no available financial information available about gift card use in the ACT, based on the ACT's population share it could be estimated that $24 million is spent annually on gift cards in the ACT, of which $7.2 million goes unclaimed,'' he said in a statement yesterday.

The collapse last year of the bookseller Borders created headaches for hundreds of people who held gift cards and vouchers for the retail chain.

Mr Corbell said yesterday the government was considering a $5 cash-out option for cards with of $50 or less, or 10 per cent cash-out for cards with a face value of more than $50, to provide a fairer deal to consumers at a low cost to retailers.

''The point of these proposed reforms is to ensure consumers with gift cards actually enjoy their full value instead of being short-changed if there is a small value remaining on the card after a purchase which cannot be recovered or spent. Often small balances after a major purchase are too low to purchase another product, but the company is usually not willing, or obliged to cash out that balance on the card to the gift-card owner,'' Mr Corbell said.

''This situation generates an unearned windfall for the card issuer and leaves consumers out-of-pocket and this is something that the ACT Labor government views as unfair, and is seeking to rectify.''

The ACT government is consulting on the proposed reforms with the Canberra business community, and will seek feedback through a targeted consultation process.

Mr Corbell said the problems experienced by Canberrans following the closure of Borders prompted the issue to be considered.

Australian Retail Association executive director Russell Zimmerman urged Mr Corbell to wait for a federal inquiry into gift cards to run its course before he embarked on reform.

''It is with some surprise that I learn that the ACT government is doing this when the federal government is doing a review of gift cards,'' Mr Zimmerman said.

''It would better to do this with some co-ordination, otherwise we'll end up with different rules and regulations in different states and for a major retailer, that's going to be a problem.''

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