Gift cards have become a popular option for offering gifts and rewards in the Business-to-Consumers (B2C) domain. As a business operating in the UK, it is crucial to understand the legal rules surrounding gift cards to protect both your customers and your business. In this article, we will outline the key UK legal rules that gift card providers should be aware of and explain how you can comply with them.

1. Clear Terms and Conditions (T&Cs)

When consumers purchase a gift card, they enter into a contractual agreement with the business that issues or offers the gift cards. Consequently, the use of gift vouchers is governed by contract law – the contract is usually established between the purchaser of the gift voucher and the issuer, but the contractual benefits are effectively assigned to the recipient of the gift card.

As with any agreement, specific 'terms and conditions (T&Cs)' will be associated with the purchase and use of the gift voucher. In the UK, these gift card T&Cs constitute legally binding contracts between the business and the consumer, governing the purchase, distribution, and/or facilitation of gift cards.

Clear and easily accessible T&Cs are vital, as any ambiguity or omission could pose challenges in enforcing these terms, particularly during disputes, as much would depend on the agreed-upon conditions at the time of purchase. To ensure your T&Cs are easily understandable and enforceable, here are a few essential considerations:

  • Information about the company: include clear information about the company providing the gift card, such as the business name, address, VAT number, and contact details.
  • Main characteristics of the gift card: clearly outline the main characteristics of the gift card, including its monetary value, format, and whether it can be used in-store, online, or both.
  • Redemption rules: specify how the gift card can be redeemed, its required steps, whether it can be used partially or multiple times.
  • Period of validity: state the expiry date of the gift card (see more information in section 2 below).
  • Limitations or exclusions: mention any limitations or exclusions on using the gift card, such as restrictions on specific products or combining it with other offers or promotions, limitations on the number of gift cards for a single transaction, prohibition on cash withdrawal, and any other key restriction.
  • Additional costs: if there are any additional costs associated with using the gift card (e.g., packaging, or delivery fees), include this information to avoid surprises for the consumer.
  • Cooling-off period: consumers in the UK have a cooling-off period during which they can cancel their purchase for any reason within 14 days. Don't forget to include all the relevant information about this, including how consumers can exercise this right – see more in section 3 below.
  • Rules for returns and exchanges: if applicable, explain the rules for returns and exchanges when items are purchased with the gift card.
  • Lost, faulty, and damaged gift cards: provide information on handling lost, faulty, and damaged gift cards, and consider offering the option to register gift cards for added protection.

Don't forget that you must communicate the gift card's T&Cs before and after the point of purchase. As with any other online purchase, consumers must also actively agree to these T&Cs when completing their purchase, and regular reviews and updates should be conducted to ensure ongoing compliance with applicable legal requirements.

2. Expiry Dates

A common condition that applies to gift cards is an expiry date. Under UK law, including an expiry term as a contractual condition is permissible. Retailers often set a specific period within which the gift card must be used, while others may offer more flexible options, such as "no expiry" vouchers or longer redemption periods.

Including expiry dates can be beneficial for retailers as it prevents the build-up of undeclared liabilities and ensures the timely provision of goods and services. However, for such terms to be enforceable, they must be clearly described in the sale particulars. Additionally, the UK consumer protection regime safeguards customers from unfair trading practices, misleading omissions, and aggressive sales tactics.

If a gift voucher does not specify an expiry date and the trader refuses to accept it as payment, consumers may have grounds to claim breach of contract, depending on the case. On the other hand, if a gift voucher has expired, the trader is not obligated to accept it. Legally, the responsibility lies with the recipient of the gift voucher to use it within the specified time limit. However, some traders may still accept expired gift vouchers as a goodwill gesture.

In any case, information about the expiry date must be indicated in the T&CS, on the gift card itself, on the trader's website, as well as store leaflets or on posters, if applicable. Also, ensure the expiration date is reasonable, visible and not concealed in any way. If there is no expiry date, this must also be stated.

3. 14-day to cancel online purchases

When you sell gift cards online to consumers, they have a 14-day period to change their mind and cancel the contract, provided the gift card has not been used. This starts the day after the consumer, or someone selected by the consumer, receives the gift card. Such rules apply to contracts made between a trader (seller) and a consumer (buyer) where the contract is made at a distance, such as online purchases.

Once the consumer has notified you that they wish to cancel the gift card contract, they must return the gift card to you if it is in physical form, or you must provide a means to inactivate the gift card if it's in digital form. Upon receiving a cancellation request and, if applicable, the returned physical gift card, you must repay the consumer without undue delay and no later than 14 days after you receive the card back (if in physical form). This refund must include the full purchase price of the gift card, as well as any outbound delivery costs the consumer paid. The consumer is responsible for the cost of returning the goods unless you have agreed to bear the cost or failed to inform the consumer about their responsibility to cover the return costs.

The gift cards T&Cs should include specific information about the cooling-off period and your policies. For example, the T&Cs should inform consumers about their right, detail the process to exercise their right to cancel, outline the return and refund policy for cancelled gift cards and clarify any conditions for issuing refunds, including information on who bears the return costs, as well as exceptions to the cooling-off period, such as personalized gift cards. It is important to mention compliance your contact details for customer support or assistance regarding cancellations, refunds, or other gift card inquiries.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.