Gift Cards Are Like Cash – But Customers Have a Right of Withdrawal
Gift cards are popular with consumers for many reasons. They are easy, last-minute gifts that let the recipient choose something they want. But imagine the following scenario: you order a gift card for your niece at her favourite store. You brag to your sister about it only to find out that the store was last year’s news. She’s moved on to the latest influencer-inspired trend. To be the cool Aunt, you want to return the gift card, so you can buy her one at her new favourite store. As you bought the card online in the EU, you have 14 days to change your mind. So, what do you need to know as a business about the right of withdrawal for gift cards?
Cooling-off period (or right of withdrawal)
Retailers are not legally obliged to accept returns of purchases made in physical stores simply because the customer changed their mind. But on distance (e.g., online or by mail order) and off-premises contracts (e.g. where a trader visits a consumer’s home), consumers have a cooling-off period to change their mind and return the item if they wish. This “cooling-off period” is known as the right of withdrawal. This means the customer can withdraw from the sales contract without giving a reason, and receive a refund within a specified period for the price paid.
In the EU, the cooling-off period is 14 days. If the period expires on a Saturday, Sunday or holiday, the consumer has until the next business day. Businesses may offer a longer period but not a shorter one.
In general, the right of withdrawal applies to gift cards in the same way it applies to other purchases. As in the example above, the customer is entitled to a full refund if they inform the seller during the cooling-off period about the decision. Specific rules and exceptions can vary depending on the country and the product or service offered.
Inform the consumer of their rights
It is the seller’s duty to inform consumers of their right to withdraw as well as any conditions, periods, or methods to exercise that right. This is important! If you don’t properly inform the buyer, the withdrawal period is extended for one year from the expiry of the first 14-day period. In general, it’s good to have clear, concise terms and conditions for refunds or exchanges on the card or retail website, and ensure the information is easily accessible.
To exercise the right of withdrawal, the consumer must inform the seller of their decision to withdraw. They don’t need to provide any justification. You should provide the customer with a model withdrawal form.
As a seller, you must refund the full amount of the card, including any standard delivery charges. Sellers have 14 days to reimburse the buyer after being informed of the decision to withdraw. Normally, refunds should be made through the same payment method used for the purchase, unless agreed otherwise.
Exceptions to the right of withdrawal
The right of withdrawal does not apply to all types of purchases. There may be some exceptions to this rule, such as:
- Physical gift cards that have been fully used;
- Gift cards that have been lost or stolen;
- Gift cards linked to specific events or services that have already taken place;
- Gift cards that have been personalised or customised; and
- Business-to-Business (B2B) transactions.
For personalised gift cards that have been produced uniquely for the customer (e.g. with an engraving or name personalisation), the right of withdrawal does not apply. The right of withdrawal on personalised gift cards may also depend on the specific terms and conditions of the gift card and the country, as EU Member States can have different rules.
Business-to-Business (B2B) transactions
While the right of withdrawal applies to business and consumer transactions, there may be differences. In B2B transactions, the right of withdrawal doesn’t apply where you’re selling the gift card to other businesses in a commercial context, such as for employee awards or customer incentives. General rules of sale will apply for most business-to-business sales of goods or services, not specific consumer protection regulations.
In conclusion, the right of withdrawal applies to gift cards but can vary depending on the country and the circumstances of the purchase. It’s important for business to have clear, concise terms and conditions available to consumers before they buy. For more information on how Logan & Partners can help, please contact Isadora Werneck and schedule a free 20-minute consultation.