REGULATION OF GIFT CARDS IN CANADA
Gift cards are a type of stored-value payment card issued by retailers that are preloaded with a specific value for future purchases.
These include cards that can be used at a particular store or retailer, cards redeemable at a chain or mall and credit card branded cards that can be used wherever a particular brand of credit card is accepted.
There are two main types of gift cards: “open loop” and “closed loop” cards. Open loop gift cards can be used anywhere (e.g., in any store in a shopping mall). Closed loop gift cards can only be used at a particular store, location or chain.
Gift cards are primarily regulated by provincial legislation, although some federal legislation can also apply (e.g., the misleading advertising provisions of the federal Competition Act).
Key aspects of provincial gift card regulation include rules relating to expiry dates, fees and the disclosure of key terms and conditions. Some of the requirements in British Columbia and Ontario (gift cards are also regulated in other provinces) are discussed below.
In British Columbia, the Business Practices and Consumer Protection Act (“BPCPA”) and Prepaid Purchase Cards Regulation regulate prepaid purchase cards. Consumer Protection BC enforces British Columbia’s gift card legislation and regulations.
“Prepaid purchase cards” are defined as cards, written certificates or other vouchers or devices with a monetary value that are issued or sold in exchange for the future supply of goods or services to consumers, including gift cards and gift certificates.
In general, British Columbia’s gift card legislation prohibits expiry dates and fees (except in certain circumstances), requires suppliers to disclose certain prescribed information (and sets out how that information must be disclosed) and gives gift card purchasers certain refund and other rights where the legislation is not complied with.
Expiry dates are permitted for cards that are sold for a charitable purpose, for a specific good or service (e.g., a gift certificate for a haircut as opposed to an amount of money) and some types of marketing, advertising or promotional purposes.
Fees are permitted, among other things, for replacing lost or stolen cards and certain fees for “mall cards” (i.e., cards that can be used at multiple unaffiliated sellers). For example, mall cards may include a maximum purchase fee of $1.50 and specified fees for inactive cards after 15 months, unless extended by the purchaser of the gift card.
The BPCPA also requires that the following information be disclosed when prepaid purchase cards are issued or sold clearly and in a manner “likely to bring it to the attention” of the buyer: (i) restrictions, limitations, terms and conditions for the card’s use, redemption or replacement, including permitted fees or expiry dates; and (ii) how consumers can obtain more information (e.g., remaining balance).
If permitted post-purchase fees are charged, these must also be disclosed and they must be “prominently displayed” on the card in a “clear and comprehensible manner”.
Some exceptions to the regulation of prepaid purchase cards include phone cards and cards with credit card branding or logos (e.g., VISA, MasterCard or American Express).
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