If I have a small amount of credit left on a gift card, does the merchant get to keep that money?
Why do so many stores sell gift vouchers that do not correspond with the prices of the items they sell? Often when I receive a gift voucher, I will end up with store credit of only a few dollars remaining, or I will have to spend a bit of my own money if I want to make a purchase, which sort of defeats the purpose of a gift voucher.
If I have $4 of store credit left for a shop where no items cost $4, am I entitled to a refund for the final amount? Is there any other recourse? It seems unfair if a merchant just gets to keep some of the money from a purchase intended as a gift.
– Alex, NSW
Gift cards can be an easy way to give a thoughtful gift – say to someone’s favourite store or restaurant. But as you rightly point out, they come with some fairly annoying catches.
One catch is that if you don’t spend the full value of the gift card, you generally won’t be entitled to a refund for the remainder.
A 2023 survey by Finder estimated that the value of unused gift cards in Australia is about $1.9bn. The survey found two in five respondents had unused gift cards, which would equate to an average of $243 unused gift card dollars per person. Some of these were due to the expiration of the gift card (22%) and some were lost (6%), but it’s likely many people only used some of the value available on the card.
In Australia, gift cards are mostly regulated through the Australian Consumer Law, which doesn’t treat them the way it treats other consumer products. Importantly, all your consumer rights apply to whatever you buy with the gift card, so if you buy something faulty, you have the right to a repair, replacement or refund.
The Australian Consumer Law was updated in 2019 to enforce some stricter rules around gift cards. These included a minimum three-year expiry period from the date of purchase (there are some exemptions to this – for instance vouchers for time-limited performances). The law also bans fees after the sale of the gift card. Unfortunately none of the changes entitle you to a refund for unused credit.
Along with these updates, the Australian Consumer Law also requires that businesses selling gift cards provide the buyer with clearly stated conditions and restrictions relating to their use. You’ll find that, in general, most will have a “no-refunds” policy.
I have yet to see terms and conditions that allow for a refund on unused amounts, but it’s still worth checking the gift card terms and conditions. If they’re silent on the matter, it might be worth raising it with the business.
The times when the Australian Consumer Law can assist you with a refund on a gift card are limited to when the business has misrepresented the voucher or did not disclose terms and conditions at the time of sale. So for instance, if you have an unused credit on a gift card then find the business does not allow the card to be used twice, and this was never disclosed to you at the point of sale or in any terms and conditions, you may be entitled to a refund for that unused amount.
So, to answer your question, whether or not you are entitled to a refund on some or all of a gift card’s value will depend on the terms and conditions set by the business. And I wouldn’t bank on a business to allow for refunds on a gift card. Unfortunately, you don’t have much recourse to reclaim unused amounts, which Choice describes as one of the pitfalls of gift cards.
As to why businesses set their gift card amounts the way they do, I can really only speculate. Administratively, it’s probably easier to have set, round numbers. More cynically, I imagine if everyone with a gift card forfeited $4, the sum is a nice amount of free money to a business.
Alternatively, from a behavioural economics perspective, businesses might also be hoping that with a little bit left over, you’ll be inclined to spend more of your own money with them in order to redeem the card’s remaining value.
Research would also suggest it’s common that when you give a gift card, no amount is ever used. Ultimately, it’s up to you to weigh up whether the value of giving gift cards stacks up against any potentially unused amounts.
Kat George is a board member at Australian consumer advocacy group Choice. Her Guardian column is written in her capacity as a policy expert and does not reflect the views of Choice
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