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December 8, 2016

‘Tis Gift Card Season: What you need to know about Manitoba’s Gift Card Legislation

By Lindsay R. Martens

As you prepare for the holiday season, you likely have at least one hard-to-buy-for person on your list. The safest bet for the fussy is a gift card.

Their appeal is irresistible to consumers who desire to take the guesswork out of gift-giving and avoid the time-consuming task of carefully selecting and wrapping the perfect gift.

It’s no wonder the gift card business is a multi-billion dollar industry in Canada. While the allure of the gift card is tempting to holiday shoppers, it does have its drawbacks as well, most of which affect the recipient. How many of us have received a gift card only to have it expire, thereby incurring reactivation fees and other charges, or become exasperated attempting to find the terms of use or the balance remaining on a gift card from months past?

The Manitoba government enacted legislation to target these and other issues, a move which intensified the love affair consumers already have with the wildly popular gift card. The following is a brief summary of the key points touched on by The Consumer Protection Amendment Act (Prepaid Purchase Cards) and its corresponding regulations, which regulate gift cards sold in Manitoba on November 1, 2007 or anytime thereafter.

Expiry Dates

The legislation prohibits expiry dates on all gift cards for which the consumer makes payment in full. Outside the scope of this provision are those gift cards that are issued for promotional or charitable purposes or as part of a reward or loyalty program. Also excluded are those gift cards that are sold for a specific good or service, such as a manicure, as opposed to a particular dollar value.

The logic behind this distinction is that the value of a specific good is subject to change in response to fluctuations in the economy, but money is money and a gift card with a cash value should be recognized as such. If a supplier chooses to include an expiry date on a gift card in violation of the legislation, it will be unenforceable, as if the expiry date does not exist, and the supplier will be subject to an administrative penalty in the range of $1,000 to $5,000.

Fees

Suppliers are only permitted to charge a fee to a gift card holder to replace a lost or stolen card or for customization of the gift card itself. Absent the foregoing exceptions, no fee, other than the value paid by the consumer to obtain the gift card, can be associated with the purchase or redemption of a gift card.

Suppliers who charge fees contrary to the legislative prohibitions will be required to refund the charge to the consumer on demand, provided said request is made within one year after payment of the fee is made. Key terms relevant to the use of the gift card must be clearly displayed on the card itself and visible to consumers at the time of purchase, including the fees that the supplier may legitimately charge, all restrictions, limitations, and conditions that the supplier may impose on the use of the gift card, and how consumers can obtain further information about the gift card, including any unused and remaining balance thereon.

Manitoba’s gift card legislation was enacted to protect consumers from loss of card value arising from unfair expiry dates and fees commonly associated with the use of gift cards in the past. However, the legislation is not as straightforward as it might appear at a first glance. Manitoba’s legislation does not regulate gift cards issued outside the province (although most provinces have enacted similar legislation) or by federally-regulated businesses, including telephone service providers which market prepaid phone cards, or banks which sell prepaid purchase cards.

Although Manitobans already enjoyed strong consumer protection with respect to gift cards, a more recent amendment to The Consumer Protection Act, which took effect in 2015, prohibits inactivity fees on prepaid purchase cards. Businesses that impose inactivity fees on gift cards violate the province's legislation and may be subject to fines. 

It is important that consumers make all due inquires as to the nature and type of rules applicable to gift cards purchased by them and, correspondingly, that retailers familiarize themselves with the recent changes in gift card regulation to keep abreast of any future amendments.

Lindsay Martens is a lawyer at Fillmore Riley LLP who practices in the areas of corporate and commercial law. You can reach Lindsay by phone at (204) 957 8368 or by email at lmartens@fillmoreriley.com.

 

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