New research indicates that about 40 per cent of adults in Canada received at least one gift card in Christmas 2006 and gift cards account for $1.6 billion in holiday spending alone. But did you know that, until October 2007, expiry dates and other fees often reduced or wiped out the value of these cards over time?
That has all changed. On October 1, 2007, the Consumer Protection Act banned expiry dates and most fees on gift cards purchased on or after that date to make sure you get their full value, regardless of when you use them.
Gift cards are popular with consumers and businesses. But many of them expired a year or two after purchased or included fees that reduce the actual value of the card. Some of these fees included:
- Activation fees: Some businesses forced you to pay an added service fee to purchase the card or use it for the first time.
- Dormancy fees: These fees were deducted from the unused balance of your card, until it was emptied.
On October 1, 2007, expiry dates and fees were banned on retail gift cards, except for fees to customize a gift card or replace one that had been lost or stolen.
Gift cards redeemable at more than one unaffiliated store (‘mall cards’) are temporarily exempt from rules on fees, but must follow the rules relating to expiry dates and disclosures. The ministry is working with stakeholders to determine the best way to regulate these cards and expects to make a decision by Summer 2008.
The new law will not apply to loyalty cards used to collect rewards or points and will not apply to cards that are subject to federal jurisdiction, such as prepaid phone cards. Cards or certificates that are redeemable for specific services, such as a massage at a spa, are also not covered.
The ban on expiry dates and some fees only applies to cards purchased on or after October 1, 2007. It is important to read and understand the terms and conditions of each gift card before you buy.
