The 2016 “gift-card” report of the UK Law Commission examined whether there should be greater protection for consumers who lose deposits or gift vouchers when retailers or other service providers go into insolvency. It made some limited recommendations, none of which have been enacted.
Australia’s own 2016 Senate Committee inquiry in Australia into gift vouchers arose out of unredeemed cards issued by Dick Smith Electronics before its financial collapse and insolvency. The inquiry has now been abandoned.
Fortunately, the submissions it gathered and other ideas internationally have been well analyzed in an article by Professor Chris Symes and Dr Beth Nosworthy, both of the University of Adelaide.
“Prepayment consumer creditors; a special case for insolvency proceedings?” appears at (2017) 24 Insolv LJ 29.
The article analyses the main submissions to the Senate inquiry, recounts the Dick Smith gift card issues, and considers whether insolvency law principles should offer any protection or priority for specific consumer creditors including gift card holders. The responsibility of company directors, in relation to insolvent trading and their duties to the company, are examined in this context. International recommendations, including from the UJK Law Commission, and the US, are considered.
One conclusion of the article is that the “public anger” fuelled by unmet gift cards – affecting grandchildren, nieces and other such newsworthy victims – is not a basis for law reform, a theme of most of the submissions to the inquiry.
That public anger can be extreme, as English politicians found out, when undelivered Christmas hampers are involved.
Whether gift-card “injustices” warrant separate trust fund arrangements is left by the authors for further debate, in the view of some, preferably in the long distant future.