More than 70 percent of us regularly buy gift cards. They’re the go-to option for shopping dilemmas. But strict expiry dates mean many consumers are getting stuck with cards they can’t redeem. The amount being lost is likely to add up to millions of dollars every year.
Our latest survey found one in five gift card recipients had been left empty-handed after the card expired before they could redeem its full value. Based on the typical gift card value, we estimate consumers could be losing $10 million annually.
In response to our campaign, retailers have begun to drop or extend their expiry dates.
Gift cards may be a quick fix for the last-minute shopper. But unfair expiry dates mean they can be little more than a gift to the retailer.
Of 60 cards we looked at, more than half expired after just 12 months. The meanest gift card was Ticketek’s: it runs out after a measly six months.
When a card expires, the retailer keeps any remaining money. Of the 20 percent of gift card users who’ve been stuck with an expired card, more than half had more than $20 left on the card. Ten percent lost more than $60.
Retailers are coy about revealing how much they earn from unredeemed cards. But company accounts reveal gift card income is typically calculated on the assumption a percentage of shoppers will never spend all the money on the card.
Paper Plus, which has 12-month expiry dates on its gift cards, provides for a “non-redemption allowance” in its accounts.
Ticketmaster, which also has a 12-month expiry date, recognises income from gift cards based on the amount “the customer is reasonably assured not to redeem”.
Few retailers publish actual figures on the proportion of cards not used before they expire. Of those that do, non-redemption rates are between five and 10 percent. Across a multi-million-dollar industry, that adds up to a tidy sum.
Changing the game
Retailers gain significant benefits from gift card sales. They get payment in advance. They also have the prospect of further sales when the card is used: retail sales data show customers who redeem gift cards often spend more than the value of the card.
But it’s hard to find a good reason why retailers need to impose expiry dates on the cards. Some companies, including hardware store Bunnings and menswear retailer Barkers, don’t use them.
Gift card expiry dates have been given the boot elsewhere. Most Canadian provinces have banned expiry dates. Ireland is planning to follow. Gift cards in the US are required to have an expiry date of at least five years. Since the law change, the proportion of cards not redeemed has reportedly dropped from 10 to less than one percent.
The majority of Kiwi consumers want the rules changed here too. Our survey found 54 percent of those who had a view thought gift cards should have no expiry date; 13 percent thought if there was a date, it should be up to five years.
Support our campaign
We’re calling on retailers to end unfair expiry dates on gift cards.
We’ve written to the 10 major brands below, asking them to lead the way and ditch the expiry dates on their cards.
- New World
- Noel Leeming
- Paper Plus
- Prezzy Card
If companies don’t lift their game, we want the Fair Trading Act amended to make imposing expiry dates on gift cards an unfair practice.
Add your voice to our campaign and help us get change.