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

Question again proposed: "That the Bill be now read a Second Time."

Fianna Fáil supports the general principles of the Bill and it will examine potential amendments if necessitated. It is something we are discussing at the moment.

The Bill aims to strengthen consumer protections relating to the sale and use of gift vouchers, with the market largely unregulated in Ireland. Fianna Fáil has led the way in the Oireachtas on enhancing consumer safeguards via the Consumer Protection (Amendment) Bill 2017. A Fianna Fáil Bill to regulate gift vouchers with a minimum five-year expiry date passed the Dáil unanimously last June on Second Stage while pre-legislative scrutiny took place last October. However, mysteriously, the Government has refused to grant a money message to advance our Bill to Committee Stage over the past five months and instead, in a cynical turn, has decided to rush forward its own proposal in an attempt to cover up its tardiness in legislating for consumers in this area.

Successive Fine Gael-led Governments have sat on a 2015 consumer rights Bill to regulate gift vouchers, citing EU legislation coming down the road, which would have primacy over domestic legislation as the reason for not proceeding. However, the goalposts have been changed and this excuse is seemingly no longer applicable as the Government tried to fast-track its Bill. This approach to legislation knows no bounds as public relations trump substance at every occasion, something that permeates from the Taoiseach down.

The Bill, on Second Stage today, includes a five-year minimum expiry date. It also prohibits the following two unfair terms for the sale of gift vouchers. This applies to traders who require vouchers to be expended in full in a single transaction and the requirement to pay a fee to amend the name of the gift voucher recipient.

Section 1 provides for the definition of the principal Act.

Section 2 provides for the introduction of a minimum five-year expiry period for gift vouchers. In addition, it provides that traders must inform consumers of the expiry date. Two unfair terms are to be prohibited. The first is where traders require gift vouchers to be spent in full in a single transaction. The second provides for a prohibition on the requirement to pay a fee to amend the name of the recipient on that gift voucher. The section also provides for offence provisions for contraventions of the section.

Section 3 provides for consequential amendments to the Consumer Protection Act 2007.

Section 4 provides for the Short Title as well as the collective citation and commencement.

We are told there will be a modest cost to the Exchequer arising from the additional enforcement activity that will be undertaken by the Competition and Consumer Protection Commission, CCPC. Gift vouchers and gift cards currently remain unregulated in this country. A survey carried out in 2013, undertaken for the National Consumer Agency, NCA, found that 80% of people had purchased gift vouchers at some point. Estimates suggest that between 1% and 2% of gift vouchers redeemable in many outlets go unredeemed. I am culpable of that myself. Some 8% to 10% of gift vouchers that are redeemable in a single retailer or service provider may not be redeemed. However, consumers receiving the gift vouchers are often left unaware of the terms and conditions that apply. Specifically, the time that vouchers remain valid can vary and, as a result, consumers are left short-changed when they go to redeem them. Some retailers are more flexible than others but they currently have the right to refuse to honour the voucher outside the defined period. This Bill provides for new provisions in regulating the sale of gift vouchers and the contracts for their supply by amending the Consumer Protection Act 2007; establishes a definition for gift vouchers; and proposes that there can be no expiry date on gift vouchers which is not less than a five-year period and all gift vouchers would remain valid for five years. This five-year expiry date has been deployed in other jurisdictions to good effect.

I have experience of many small shops and stores particularly in my own region. In an awful lot of cases, even though they do not have to do it now, shop owners will put an expiry date on a voucher. In most circumstances, local shops or stores are reasonable and, if the consumer is a few months outside the expiry date, they are more than willing to accommodate them. Sometimes the larger stores are not as easy to deal with and they can certainly be problematic.

We must also understand that businesses have concerns about this legislation and I acknowledge that.

I welcome the opportunity to contribute to the debate. I am the Chairman of the Oireachtas Joint Committee on Business, Enterprise and Innovation. My committee colleagues, including Deputy Quinlivan, and I have spent quite a bit of time focusing on the issue of gift vouchers. We carried out pre-legislative scrutiny of a Bill brought forward by a colleague of mine, Deputy Niall Collins, and there were many similarities between the two Bills. Regardless of where the Bill comes from, it is high time that we have legislation to protect the consumer. That is the most important issue.

As someone with a retail background who has worked on both sides of the counter all my working life, I have a lot of experience with gift vouchers and the way they can be exploited in different businesses and shops. In the main, people are fair and will put an expiry date a couple of years hence on the gift voucher. The consumer knows that if they buy a gift voucher for €100, it is the same as having cash in their pocket and they will have the opportunity to spend it. Unfortunately, some businesses, for example, are much more rigorous with their terms and conditions and, if a gift voucher expires after a year, it is as good as the consumer losing €100 from their pocket as he or she does not get the opportunity to spend it. I welcome the fact that the gift vouchers will have a five-year time limit. That is important because sometimes people might receive a substantial gift voucher. At Christmas, many people get gift vouchers as a tax-free bonus from work and they might spend a couple of hundred euro out of the voucher and then it goes into the back of the wallet, or it is put away and forgotten about. It is important that the voucher is there for people and they know it will not reduce in value.

We have to put the consumer first and foremost. Money is hard earned and it is important that people know that, when they buy a voucher, they are protected. It is also important that the terms and conditions are printed clearly and consumers know what they are. The time that vouchers remain valid can vary and it is important that there is standardisation of that across the board. The Bill provides for new regulations on the sale of gift vouchers and the contracts for their supply by amending the Consumer Protection Act 2007. The Bill also establishes a welcome definition of gift vouchers.

The unregulated sector of gift vouchers accounts for 65% of the market. These are mainly single brand store cards and shopping centre cards. There is no protection of funds loaded on cards and retailers use the fund as normal work capital and thus, if a retailer collapses, the funds are lost to consumers. That is something we have witnessed for many years. People with gift vouchers worth €50, or €100, or whatever, lose it when a business collapses. That certainly needs to be looked at.

The regulated sector accounts for 35% of the gift voucher market. These would more often be electronic vouchers. It has come to my attention that, for some gift vouchers, after a year passes the value of the voucher reduces by a small percentage every month. One will not notice that if a gift voucher is worth a couple of hundred euro.

If a person has a gift voucher for €20 - it could be a One4all voucher given to a grandchild by a grandparent - its value, after the 12 months expires, is reduced incrementally by a small percentage. If one hands over €20 for a voucher, then it should be worth that amount over time. It should be the same as having cash in one’s pocket. Unfortunately, that is not the way it always works out.

I welcome the legislation. The business, enterprise and innovation committee did much work on this area. One quibble I have is that the committee spent much time on pre-legislative scrutiny of a similar Private Members’ Bill and then the Government came forward with its own Bill. Pre-legislative scrutiny is worthwhile and timely. It was unfortunate that a good Bill, like the Private Members’ Bill in question, was accepted by the whole committee but could not receive a money message. The Government then came forward with its own Bill.

We must put the customer first and it is high time we had legislation in this area. I hope that every Member will support the Bill and that we can move it quickly through the Oireachtas.

I agree with Deputy Butler. Deputy Niall Collins brought forward a similar Private Members' Bill which the business, enterprise and innovation committee spent much time going through. Several amendments were made to it which were all agreed unanimously by the committee. Here we are again, however, with this Bill. There is a sense of déjà vu because I had a Bill on ticket touting and we will be debating a Government Bill on this later. My Bill, approved by the business, enterprise and innovation committee, was left stuck in the committee waiting for a money message, although the issue in question needed to be tackled urgently. Obviously, the wrong name was on that Bill in the same way that Deputy Niall Collins’s name was on the Bill similar to this.

The Government’s Bill is welcome and Sinn Féin will be supporting it. Gift vouchers can be a source of great frustration for consumers when the find they have expired or have been charged fees for not using them. The lack of regulation in this area has left consumers exposed. The Competition and Consumer Protection Commission received 1,100 complaints about gift vouchers over the past several years, showing the need for urgent action. Accordingly, Sinn Féin is happy to support the Bill.

The Bill aims to provide for a five-year expiry period for gift vouchers; prohibit terms on gift voucher contracts which require gift vouchers to be spent on single transactions; ban conditions which would impose a fee for changing the name of a recipient on a gift voucher; and provide for the publication of guidelines by the Competition and Consumer Protection Commission on gift vouchers.

While these are all welcome changes, I note the absence in the legislation for the regulation of dormancy fees on gift vouchers. The Oireachtas Library and Research Service prepared a paper on the Bill, focusing on this specific issue. It highlighted the fact that the state of New South Wales in Australia has a law which bans post-purchase fees, including activation, account-keeping, balance inquiry and telephone inquiry fees, as well as fees applied when a card is inactive or not used. The latter are sometimes called dormancy or inactivity fees. In Ontario, businesses are not allowed to charge dormancy fees or activation fees. These dormancy fees can be a big issue for many consumers as they eat away at the monetary value of the vouchers without consumers knowing. Will the Minister of State provide more clarity as to what exactly the current position is on dormancy fees? What impact did lobbying from gift voucher companies have on the decision to omit these fees from the legislation?

My party colleague, Senator Pádraig Mac Lochlainn, raised the issue of experience vouchers with the Minister in the Seanad. It is important we discuss how this legislation will affect gift vouchers given for experiences for, say, a hot air balloon ride, a bungee jump, adventure sports or race car driving. These vouchers are sold as an experience with no price on them which makes them popular as an ideal gift. However, the cost of these activities could change dramatically over the proposed new five-year expiry period. For example, a voucher for a hot air balloon experience could be purchased now for €300 with a five-year limit in force. If the price of insurance or gas went up substantially in that timeframe, the profit margin of the company would be eliminated.

As we know, the problem of escalating insurance costs is going unaddressed by the Government. It does not seem to have any interest in this issue of serious concern to most, if not all, businesses across the State. Recently I met with stakeholders who said a tsunami is coming as businesses will not be able to afford to pay for their insurance coverage soon.

It is important that the Bill’s provisions are enacted as soon as possible. There should be more co-operation between the Government and the Opposition on bringing forward Bills which cover the same issues. Such co-operation would lead to a quicker legislative process.

I thank the Minister for bringing forward the Bill. I hope it will bring benefits to consumers across the whole of Ireland.

I thank all Deputies who contributed to the debate. The Minister welcomes the broad support for the Bill. She has also considered carefully all the points raised in the debate.

The Bill deals with an issue of considerable importance for consumer welfare and businesses which provides goods or services to consumers. It is clear consumers deserve greater protection with gift vouchers. Following this debate, it is clear there is wide support for introducing a longer expiry date which will benefit all gift voucher holders, a point made by Deputy Butler. It is equally important consumers are protected against unfair and anti-consumer practices which require the consumer to fully use the value of the voucher in one transaction, as well as the restrictions put in place by certain businesses regarding the name of the recipient.

Deputy Quinlivan referred to fees. While the Minister remains strongly in favour of the regulation of gift voucher fees, a legal issue emerged during 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 of the regulatory regime for electronic money products. The office of the Attorney General did not consider, however, that this issue affected the Bill’s provision for a five-year minimum term for gift vouchers. If a review concludes that the provision to give the Minister for Business, Enterprise and Innovation power to set certain gift voucher fees would not involve impermissible or inappropriate double regulation of electronic gift vouchers, the Minister would then propose to reintroduce it on Committee or Report Stage.

Deputy Quinlivan referred to the issue of experience gift vouchers and the difficulties a five-year expiry date provision might cause for businesses which provide this type of voucher. While we have considered the points made by the Deputy, I am not minded to make a special provision for vouchers of this kind. If a different expiry date provision or no expiry date applied to these vouchers, it would create an undesirable confusion in the minds of people.

I thank Deputies who contributed to this useful and informative debate. The Minister looks forward to working with Members on amendments that she or they may propose on Committee and Report Stages.

Question put and agreed to.