Promotions and price reductions are powerful tools in the retail sector, and are subject to legal regulations. From sales and liquidation sales to special offers, coupons, Promotions and price reductions are powerful tools in the retail sector, and are subject to legal regulations. From sales and liquidation sales to special offers, coupons, contests and price comparisons, retailers must strike a balance between effective marketing and legal compliance. In this blog series, we explore key legal principles to help navigate promotional strategies as well as the main pitfalls. It is not an exhaustive overview of the rules but rather a guide to the main points to keep in mind.
This series will cover:
- Price reduction announcements: the legal framework and best practices
- Sales periods: rules, restrictions, and compliance
- Liquidation sales: when and how to legally conduct them
- “Buy One, Get One Free? ” The legal do's and don'ts of joint offers
- Promotional contests: how to organise them without legal risks
- Coupons and vouchers: don't forget the required information
- Gift cards: legal considerations and recommendations
Professional legal support is highly recommended when running promotional actions, whether for examining envisaged promotional actions, validating advertising material or drafting the applicable general terms and conditions. Indeed the Economic Inspection keeps a close watch and can impose heavy penalties on retailers failing to comply with the rules.
Part 7 – Gift cards: legal considerations and recommendations
This seventh part of our “Retail promotions & pricing: legal essentials for businesses” series presents best practices for issuing gift cards.
What are the requirements for issuing gift cards?
Belgian law does not impose specific regulations on the issuing of gift cards.
This means that only the general principles of consumer contracts apply, particularly regarding the transparency and information obligations. Retailers are free to determine the conditions for selling gift cards, but they must clearly inform consumers about the card's key characteristics to ensure fair and transparent transactions.
What are the essential elements to define?
When issuing a gift card, retailers should clarify the following aspects:
- Price and value
The price of the gift card must be clearly communicated to the consumer at the time of purchase.
However, it is not mandatory to print the value directly on the card itself. Some retailers prefer this discretion, particularly for gift purposes.
- Expiry Date
Retailers can set an expiry date at their discretion. If no expiry date is stated on the card or in the terms and conditions, then the gift card is valid indefinitely.
Even though there are no strict legal rules, expiry dates should be reasonable. The acceptability of an expiry date is assessed on a case-by-case basis, but generally a validity period shorter than one year is uncommon and should be justified.
Many retailers opt for a two- to five-year validity period to ensure consumer confidence.
- Usage Restrictions
Retailers can define conditions for using gift cards, but these must be clearly communicated to consumers.
Common restrictions include whether the card is valid in all stores or only at specific locations. Retailers can also prohibit using gift cards for specific ranges of products, discounted products or during promotional sales. Most retailers state that a gift card cannot be redeemed for cash, except where required by law.
These conditions should be stated clearly at the time of purchase and available to both the purchaser and the gift card recipient, either through accessible terms and conditions (such as on the website) or, where possible, printed directly on the card.
What form should the gift card take?
There are no legal requirements for a gift card's physical or digital format. Technically, even a handwritten note signed by the retailer could serve as a gift card. However, to prevent fraud and disputes, it is advisable to issue secure gift cards (whether physical or digital) with unique identification codes.
If possible, it is also recommended to clearly state the essential information on the card itself, such as: the retailer's name or logo, the expiry date, the value and a reference to detailed terms and conditions (such as a website URL).
Conclusion
While Belgian law offers retailers flexibility in defining their gift card policies, ensuring transparency and clarity is essential for avoiding legal disputes and maintaining customer trust. By clearly stating the terms and conditions, retailers can create an effective and legally sound gift card programme that benefits both the retailer and the consumer.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
