Consumer Protection (Gift Vouchers) Bill 2018 [Seanad]: Second Stage

I move: "That the Bill be now read a Second Time."

The Bill proposes to amend the Consumer Protection Act 2007 to provide additional protections for consumers who receive gift vouchers. Very few people have not given or received a gift voucher at some point. Industry estimates suggest the annual value of gift vouchers sales is approximately €600 million. A survey undertaken for the Competition and Consumer Protection Commission in 2014 found that 41% of consumers surveyed had purchased a gift voucher in the previous 12 months. It is clear, therefore, that the appropriate regulation of gift vouchers is an issue which impacts a significant number of people. However, at present, there is no specific legislation dealing with gift vouchers.

The Bill proposes that gift vouchers must have an expiry date of not less than five years from the date on which the voucher was issued. A trader who supplies a gift voucher must also provide information on its expiry date on a durable medium such as paper or email. Currently, expiry dates for gift vouchers can vary widely from as little as six months up to ten years. In the retail sector, expiry dates for vouchers issued by large retailers are typically for two years from either the date of purchase or of last use. In the hospitality and travel sectors, an expiry date of one year is common.

Research undertaken in 2013 and 2014 by the then National Consumer Agency found that between a quarter to a half of consumers had let a gift voucher expire at some point without using it. In some cases, this happened because the voucher was lost or forgotten about. In other cases, however, consumers found themselves unable to use a gift voucher because it had expired before they went to redeem it. It is entirely wrong that consumers should find themselves unable to use a gift voucher because of an unreasonably restrictive expiry date imposed by the business that issued the voucher. The five-year minimum term for gift vouchers provided for in the Bill strikes a fair balance between the right of consumers to get what they or someone close to them have paid for along with the need of businesses for commercial certainty.

The Minister for Business, Enterprise and Innovation, Deputy Humphreys, noted that Retail Ireland, which represents retailers with over 3,000 outlets, in its response to her Department’s public consultation of July 2018 on gift vouchers, stated it was not opposed to the proposed five-year term for gift vouchers. Chambers Ireland, which represents 43 affiliated chambers, indicated five years was a reasonable minimum term for gift vouchers. The Minister believes these views reflect the fact that responsible businesses want to treat consumers fairly and to retain their goodwill. The Minister is aware that some, although not all, businesses will in fact honour gift vouchers which are tendered after the expiry date. Many Deputies are aware of cases where local businesses have honoured vouchers after the expiry date. This shows a loyalty to the customer which is to be commended.

The Bill is about giving certainty to people that their voucher will, at a minimum, be valid for five years. In the United States, gift vouchers must be valid for at least five years under federal law. Several US states provide for a complete ban on expiry dates, as do several provinces in Canada. The Bill includes provisions that address certain unfair practices which were brought to the Department’s attention in consumer responses to its public consultation on gift vouchers.

The first of these provisions deals with gift vouchers which require the full value of the voucher to be redeemed in a single transaction. While this is not a widespread practice, the Minister is aware of several cases where traders impose such a requirement. There is no justification for such an unfair and anti-consumer practice. Accordingly, the Bill prohibits this practice. It provides that where a consumer redeems only part of the value of a voucher and the remaining balance is greater than €1, the trader must reimburse the remaining balance by way of cash or another gift voucher. For example, if a customer has a restaurant voucher for €100 and the cost of a meal comes to €75, the restaurant must give the customer the remaining balance of €25. The restaurant cannot make the customer use the full voucher in one single transaction or risk losing the balance.

The second provision seeks to address cases where the purchaser of a voucher is required to indicate the name of the intended recipient. If the name of the recipient on the voucher differs from the recipient’s name as stated, for example, on their passport, the recipient may be precluded from using the voucher. For example, the Department recently received a representation from a retired person on a fixed income who has been unable to use €200 worth of vouchers to book flights to visit family and friends in the UK because the family members who purchased the vouchers used the familiar name by which they knew the person rather than the name on the person’s passport. Appeals to the airline to reissue the voucher in the name stated on the passport have been unsuccessful.

In the Minister’s view, this type of restriction on the use of a voucher is manifestly unfair and she is glad to have the opportunity to tackle it.

The Bill provides accordingly that where a gift voucher is subject to a requirement that it be used by a named consumer, a trader shall not refuse to accept a gift voucher from a consumer other than the consumer named on the voucher. Additionally, the Bill provides that a trader cannot charge a fee for amending or changing the name of the consumer named on the voucher. The Minister believes the inclusion of these provisions in the Bill shows the value of the public consultation.

Since there is only one other Deputy in the House, I can cut and allow him to speak because he has come in. Would that be okay?

It is up to the Minister of State.

I will try to finish by 7.55 p.m. Another Deputy has just come in.

If Deputies are aware of other unfair practices involving gift vouchers, the Minister, Deputy Humphreys, would be glad to have details of them and is willing, where necessary, to introduce amendments to the Bill to address such practices.

So far, I have been discussing what is contained in the Bill. I must turn now to a provision that does not form part of the Bill. As Deputies may be aware, the scheme of the Bill, which the Minister received Government approval to draft in June 2018, included a provision authorising the Minister for Business, Enterprise and Innovation to make regulations on fees for the issue and replacement of gift vouchers and for inactive balances on gift vouchers. The latter fees which range, from €1.40 to €3.50 per month are commonly known as dormancy or maintenance fees and apply after 12 months to electronic money gift vouchers such as the One4All and FromMe2You gift cards, as well as to some shopping centre gift cards.

Consumers understandably feel that they should be able to redeem gift vouchers at their full face value. While some of these providers may argue that their gift cards are not subject to expiry dates, if after 12 months €1.50 is being deducted every month from a gift card for a relatively small amount, it will not be long before the value of the gift card is completely wiped out. The Minister believes, in essence, this is an expiry date by another route. However, the providers of regulated electronic money gift vouchers maintain that the cost of providing the additional protections required by law for these products necessitates the imposition of fees.

While the Minister remains strongly in favour of the regulation of the gift voucher fees in question, a legal issue emerged in the course of drafting the Bill regarding the power proposed for the Minister for Business, Enterprise and Innovation to make regulations fixing these fees. The issue related to possible encroachment on the regulatory regime for electronic money products. As the Minister did not wish to delay publication of the Bill further, she decided to omit the provision on the regulation of gift vouchers fees pending the outcome of the required legal review. If the review concludes that the provision to give the Minister for Business, Enterprise and Innovation power to set certain gift voucher fees would not involve an impermissible or inappropriate double regulation of electronic money gift vouchers, the Minister would propose to reintroduce it on Committee or Report Stage. The fee-setting power proposed for the Minister would be subject to certain conditions, including requirements for prior consultations, for fees to be proportionate and commensurate with the costs incurred by businesses in supplying and servicing gift vouchers, and for consumers to be protected.

I now turn to the purpose of each of the sections of the Bill. Section 1 refers to the Consumer Protection Act 2007 as the Bill’s provisions will form a new Part 4A of that Act. The incorporation of the Bill’s provisions in the 2007 Act means that the comprehensive enforcement regime in Part 5 of the Act will apply to breaches of these provisions.

Section 2 provides for the insertion in the 2007 Act of Part 4A comprising new sections 66A and 66B. Section 66A defines gift vouchers and provides for a number of exclusions from the definition. These exclusions relate first to vouchers usable only for the purchase at a discounted price of specified goods or services from a specified trader or traders on a specified date or for a specified period of limited duration. They apply, second, to vouchers supplied under a customer loyalty or promotional scheme and, third, to vouchers supplied to a consumer by way of a refund for goods by a consumer to a trader. It may be necessary to provide for further exclusions by way of amendment to clarify that products such as transport or telephone cards, which would not generally be regarded as gift vouchers, do not come within the scope of the definition.

Section 66B provides for the five-year expiry date for gift vouchers outlined earlier and for the requirement for the trader to inform the consumer of the expiry date, if any, to which the voucher is subject. The section also contains provisions addressing unfair practices which, first, require gift vouchers to be redeemed in full in a single transaction and, second, which preclude the use of vouchers because of issues relating to the name of the recipient or which impose a fee to change or amend the name of the recipient of the voucher. The section also includes offences provisions and definitions of "expiry date" and "durable medium".

Section 3 of the Bill provides for consequential amendments to the Consumer Protection Act. Section 4 contains provisions on the Short Title, citation of the Act and commencement.

I welcome the opportunity to speak on the Bill. I know certain provisions proposed by the Minister are not contained in the Bill itself. From that perspective we are discussing a Bill that is published but clearly the Minister intends to introduce amendments at a later Stage.

I think the voucher industry is positive. It allows for people to provide gifts other than cash. It is part and parcel of what we do in everyday transactions and when giving presents to people. The most pertinent issues are the diminishing value of a gift voucher, the terms and conditions on the voucher and the expiry dates especially where they expire sooner than the purchaser or recipient would have anticipated.

Certain companies do everything in their power not to honour vouchers, using excuses such as the wrong name on a voucher vis-à-vis passport for airlines and so on. The overall general concept is good and should be encouraged. Very often small communities, towns and villages promote the concept of a regional or town voucher system to support and encourage local shopping. All these things are because of threats from electronic media advertising coupled with purchasing on the Internet itself.

I often become concerned when the Government steps into a marketplace, as it can be overzealous in regulation. We do not want to diminish the ability of companies to provide vouchers in a way that is meaningful and allows them to survive and continue to provide that service. Whatever is implemented must be in accordance with best practice but equally, must not be a burden on the companies to the point where they no longer exist.

Terms and conditions need to be to the fore in vouchers. When companies are selling their products, people need to be fully aware of the terms and conditions, which should not be in the small print at the bottom of the case, as is often the case. It is critical to address those points when regulating and in bringing forward this legislation.

The concept is good. It facilitates commerce by allowing people to give gifts through the voucher system. It can allow for small towns and villages or individual companies or communities to get together and also get involved in this activity. The downside can be when companies do not honour the spirit of a voucher system and try to undermine or diminish a person's ability to claim the full value of a voucher.

On the issue of the so-called maintenance fee, there is no doubt that when people buy gift vouchers, they expect the full face value to be redeemable at a future date. Over a period of time, the value of some vouchers diminishes in order to incentivise people to redeem them early. However, there should not be massive penalties of which people are unaware so that when they redeem their vouchers, they find that they have diminished in value quite substantially.

The Minister is proposing a consultative process through the Department but it is not clear what is envisaged in terms of regulating maintenance fees or diminishing values. I hope that whatever is done takes into account the sustainability of the gift voucher sector. The Minister must ensure that whatever she does, it does not impact negatively on the ability of the sector to provide a service in a way that encourages people to participate in the purchase of vouchers as gifts.

Debate adjourned.