Vouchers and discounts – what you need to know

Great marketing tools but make sure your vouchers and discounts cover all the terms and conditions.

Offering your customers and clients an option to use gift certificates, vouchers and discounts can be an enticing way to attract customers and expand your market share. It is also a valuable mechanism to receive payment up front for the promise of future work.

1. Offering a gift certificate or voucher is just like entering into any other contract for the supply of goods or services to your customers:

You need to make the terms clear. The terms can be set out in your “Terms and Conditions” which we can draft for you; on your website; and on your Gift Certificate or Voucher. If you place more comprehensive terms on your website, you should make sure your customer is aware that this is where they can find the terms.

2. You should spell out clearly to your clients each of the conditions of the offering and you will need to consider:

Clarify what your customer can expect to receive for the price they pay

You should describe the services in as much detail as you can so that your customer knows exactly what they will receive and for how much. Australian Consumer Law requires that all terms of consumer contracts are reasonable and fair to the consumer, which means that providing a clear explanation of the goods being provided will be important terms of the contract. You should ask someone to review those terms before they are sent to your client.

Explain the terms of use and how your customer can use the vouchers and discounts

You should think through how the vouchers and discounts can be used as you will need to dictate the terms of the customer’s access to the goods or services, so long as they are fair and reasonable under Australian Consumer Law.

You may want to think about which geographic locations the certificate can be used and in how much choice or selection the customer might have over the type of good or service they receive under the voucher.

Make the timeframe for use very clear

It is important that the customer is clear on how long they will have to redeem their voucher and/or whether it is redeemable in part or in full. You should also make it clear whether the voucher is redeemable for cash or for a further voucher.

Timeframe

You should take into consideration the turn-around time that would be ‘reasonable’ given the good or service being offered by you. You should also consider whether there are any specific days, dates or other restrictions on when the voucher can be used such as:

• Will it be offered for all goods or services;
• Are there any value-added services or goods that are not included;
• Must they use the entire voucher in one transaction; and
• Can the offer be used with other offerings or are other offers precluded from being used with that certificate/voucher.

Fair & Reasonable

At law, there is no prescribed timeframe in which you must make the voucher available to the customer. What you will need to consider under section 23 of the Australian Consumer Law (Competition and Consumer Act 2010 (Cth)) is whether the timeframe will:

• cause a significant imbalance in you or your customer’s rights and obligations arising under the contract; and
• be reasonably necessary to protect your legitimate business interests or the legitimate interests of your customer; and
• cause detriment (whether financial or otherwise) to you or the customer if it were to be applied or relied on.

Most vouchers are required to be used within 12 months as this provides the consumer with an opportunity use the voucher.

• Ensure you set out each of the terms in writing on your website, in an email or on the certificate itself. Ensuring all forms written confirmation of the offering are consistent if you include the terms on your website, email and on the certificate.
• If there are any disputes about the terms that arise, such as your customer asking to extend the time to use the voucher, you should proceed with reasonable commercial sense and decide what would be fair within the terms of the voucher but not too far outside of those terms.

Scenario

Vince is a hairdresser who owns a franchise of hair and beauty salons known as ‘H&B Salon’. There are 50 salons nationwide and Vince wanted to donate vouchers to various national charities to be distributed as prizes and gifts. Vince has also been promoting his business’ services to inter-state travellers to allow travellers to use the services in any State they wish. Some of the considerations Vince will need to consider in the Vouchers ‘Terms of Use’ will be:

• Making it clear that the customer can use the voucher in any franchise nationwide except Tasmania (because the franchise owners have not agreed);
• Specifying that the voucher is only to be used for 12 months;
• Clarifying that the vouchers are only for a once-off haircut, without styling, colour or blow-dry;
• Vince also notes that the voucher is not applicable to any of the beauty services, it cannot be converted to cash or used to convert to other vouchers;
• Vince makes it clear in his terms that the voucher has to be used by one person only in one visit.

Contact us today if you require any assistance with Commercial Law.

(c) Progressive Legal Pty Ltd – All legal rights reserved (2020)

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