In The Government’s Gift

at

This afternoon.

Legislation to remove excessive charges and restrictions on gift vouchers will not be passed in time for Christmas.

Last year, the Social Democrats launched the Consumer Rights (Gift Vouchers) Bill – to end the rip-off associated (unreasonable charges and expiry rules) with gift vouchers and cards.

The cabinet approved six months ago toa minimum five-year expiry date on gift vouchers.

Social Democrat co-leader Catherime Murphy said:

“The government has been promising since 2015 to increase protections for consumers. But there’s still no sign of the legislation to stop companies from charging maintenance fees on gift cards or selling vouchers with expiry limits of less than five years.

It’s inexcusable that another Christmas season will come and go before consumers get the protections they deserve. The Social Democrats are keen to see action in this area.

“[our] Bill would have ensured gift vouchers are valid for at least five years, would ban charges for issuing gift vouchers and would ban the practice of applying charges to unused or inactive balances. It would also ban any charging for the repayment of credit balances on gift vouchers.”

Minister’s plans for gift-voucher expiry charge falters (Irish Times)

Previously: Don’t Look A Gift Voucher In The Mouth

Pic: Shutterstock

7 thoughts on “In The Government’s Gift

  1. dhaughton99

    Can’t be upsetting friends.

    https://en.wikipedia.org/wiki/Michael_Dawson_(businessman)

    “Michael Dawson is an entrepreneur and former politician from County Dublin in Ireland. He served briefly as a senator in 1989, when he was nominated by the Taoiseach to the 18th Seanad to fill a vacancy after the 1989 general election.[1]

    He is the founder and CEO of the Gift Voucher Shop (GVS), the multi award-winning [2] international company responsible for the pioneering of the Multi-Retailer Gift Card. The company is now the market leader in Ireland, UK and Malta where its One4all gift cards can be bought in over 18,000 locations including the Irish Post Office”

  2. Conor O

    Although it seems like a rip off regarding expiry dates, you have to look at Gift Cards from the business’ point of view for a second. The reasoning behind expiry dates in general is purely for accounting. A gift card is not treated as “revenue” until it is ultimately spent (not when the Gift Card itself is purchased). Therefore it sits on a businesses balance sheet as a liability until it is spent. There is nothing more damaging to a business, and for making projections, raising capital etc than an endless liability.

    So you have to balance the fact that a business needs to eventually be able to write that off (and book it as profit) with the fairness of allowing a consumer to spend it within a reasonable time. One4All have what I would deem a “reasonable” approach where they slowly knock off the value of the card over a period of time (usually starting at 12 months). It’s arguably a better approach than hero to zero on a pre-defined day, which is what used to happen.

    That said, if someone is actively using a card, I’d argue that you should keep it alive as clearly that customer is spending money (maybe not in one go), and its an opportunity for businesses to create a better relationship with customers, new or returning.

  3. Dev

    Although it seems like a rip off regarding expiry dates, you have to look at Gift Cards from the business’ point of view for a second. The reasoning behind expiry dates in general is purely for accounting. A gift card is not treated as “revenue” until it is ultimately spent (not when the Gift Card itself is purchased). Therefore it sits on a businesses balance sheet as a liability until it is spent. There is nothing more damaging to a business, and for making projections, raising capital etc than an endless liability.

    So you have to balance the fact that a business needs to eventually be able to write that off (and book it as profit) with the fairness of allowing a consumer to spend it within a reasonable time. One4All have what I would deem a “reasonable” approach where they slowly knock off the value of the card over a period of time (usually starting at 12 months). It’s arguably a better approach than hero to zero on a pre-defined day, which is what used to happen.

    That said, if someone is actively using a card, I’d argue that you should keep it alive as clearly that customer is spending money (maybe not in one go), and its an opportunity for businesses to create a better relationship with customers, new or returning.Alt

    1. paul

      once the voucher is bought, it’s money in the till. If they’ve trouble with their books, that’s their business. An overly restrictive voucher is looking for free money (in most cases).

      1. Dev

        “once the voucher is bought, it’s money in the till.”

        It may be in the till, but it doesn’t belong to the business. When a Gift Card is bought, the money legally has to sit in a bank account somewhere and not be used. It’s not taxed and must be available for refund in the interim.

        Bear in mind most businesses that issue Gift Cards are not multinationals – they are small locally run SMEs. So requiring them to pay tax on a non-revenue item that they may have to refund at some point is not necessarily reasonable.

        Additionally, it may not be possible to even predict the appropriate tax amount as you can’t know what the consumer will spend it on eventually (i.e. food vs clothing vs drink etc). So it’s not feasible to book it as revenue regardless of whether you think they should or not.

  4. Conor O

    “once the voucher is bought, it’s money in the till.”

    It may be in the till, but it doesn’t belong to the business. When a Gift Card is bought, the money legally has to sit in a bank account somewhere and not be used. It’s not taxed and must be available for refund in the interim.

    Bear in mind most businesses that issue Gift Cards are not multinationals – they are small locally run SMEs. So requiring them to pay tax on a non-revenue item that they may have to refund at some point is not necessarily reasonable.

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