Consumers are being warned to check their gift cards and rights carefully after a number of people were left with gift vouchers they can’t use – or have to spend money to redeem – as businesses continue trading after hitting financial strife.
The issues occur when stores are put into administration or liquidation but are still trading.
Cosmetic chain The Body Shop was one business that has been in a slow decline, with stores closing worldwide and only a few still open in New Zealand.
Chief executive at Consumer NZ, Jon Duffy, said, “Unfortunately for consumers, there are very little protections for them in those circumstances.
“Gift card holders are unsecured creditors, so unless the receivers are willing to honour those gift cards, consumers have very little protection.”
The Government is promising to change the law so vouchers can be redeemed, to a degree.
A number of people holding vouchers for various stores in liquidation, including the Body Shop and Baby City, expressed their disappointment to 1News after discovering their gift cards are virtually worthless once a retailer reached financial strife.
Company liquidations are at a 10-year high, with retail outfits hit hard.
In the case of The Body Shop, administrators said consumers can use their gift vouchers but only if they spend the equivalent amount.
“The receivers don’t have to honour those cards, but obviously, they’re trying to get some money back into the business to help wrap up its dealings, so it works out well for them if they can match dollar for dollar by getting consumers to spend the equivalent of the gift card,” Duffy said.
The Government is promising to change the law, which will give more clarity to liquidators and receivers.
Consumer Affairs Minister Andrew Bayly said, “If a company goes into receivership or liquidation, they will have to honour 50% of the value of the voucher.
“So, if it’s a $100 voucher, that voucher will have value up to $50.”
The current law allowed for the receiver not to honour the vouchers.
“From a consumer perspective from Kiwis who’ve got vouchers from Christmas, we want to make sure that if something untoward happens, then they know exactly what the situation is.”
Consumer NZ fought for years for a law to change expiration dates, as 10% of gift cards go unredeemed, and that law has now been passed.
Duffy said: “If I have any advice for anyone, it would be, yeah, get out and spend your gift cards because once they’re expired, they’re gone.”
The minister plans to introduce his latest law change to parliament this year.