Selling restaurant gift cards in Newfoundland and Labrador: expiry rules and bonus credit

For many St. John's restaurants, December is the month gift cards earn their keep. People want something local and personal to give, and a gift card for a favourite restaurant fits perfectly. The money arrives before the quiet weeks of January, and every card brings someone through the door later, often with company. Before you sell them, it is worth knowing the provincial rules.

Can a restaurant gift card expire in Newfoundland and Labrador?

In general, no. This is general information, not legal advice, so check the current rules or ask a lawyer before you design your cards.

Newfoundland and Labrador's Gift Card Regulations, made under the Consumer Protection and Business Practices Act and in force since 2011, say that:

• Most gift cards must not have an expiry date. A card that is sold with one is treated as if it had none.
• Most fees are not allowed, such as a charge for not using the card for a while. You may charge a fee to replace a lost or stolen card or to customize a card. If a fee is charged that the regulations do not allow, the buyer or holder can demand a refund in writing, and you must refund it within 15 days.
• A card cannot be worth less than what the buyer paid for it.
• Some cards are exempt from the expiry rule and the fee limit: cards issued or sold for a charitable purpose and cards issued for a marketing, advertising or promotional purpose (a card you give away free). Those can carry an expiry date or a fee, as long as it is disclosed.
• Information must be disclosed in writing when the card is sold: every restriction, limit, term and condition on using, redeeming or replacing the card, including any fee or expiry date, and how the holder can find out about the card, including the remaining balance. Any expiry date, any fee, any return policy and contact details for balance questions must be printed on the card itself.

The practical rule for a restaurant: a gift card someone pays money for should not expire. If you set cards up in any system, choose no expiry for cards you sell in this province, because a tool may not do it for you.

What about promotional cards and bonus credit?

A popular December offer is a bonus: buy a gift card, get a smaller bonus card free. Under the regulations, a card given away for a promotional purpose can carry an expiry date. Many restaurants set the bonus to be usable only in January and February, which brings people in during the slowest weeks. If you run an offer like that, make the terms clear on the card or in the message: which part is the gift card, which part is the bonus and when the bonus can be used.

What should a gift card offer?

Offer a few set amounts for people to choose from, let a card be sent as a gift to a named recipient with a message, and let the balance be used over several visits. A card that can be bought from your social pages and sent by email suits visitors who buy for family back home. A digital card cannot be lost in a drawer, which is good for the recipient and good for you: a card that gets used brings a customer in.

When should a St. John's restaurant promote gift cards?

The obvious time is from mid-November to Christmas Eve. A few other moments work well too:

• Mother's Day and Father's Day
• Graduation season, especially near Memorial University
• Valentine's Day
• The end of summer, when visitors who loved a meal want to send one to someone back home

Put the way to buy on your social pages, mention it at the till and keep a small sign by the register in December.

How should staff handle redemption?

Train staff to apply the card before taking any other payment and to tell the guest the remaining balance. A guest who knows they still have money on the card is likely to come back.

How should you account for gift card sales?

A gift card sold in December is money received for a meal you have not yet served. Ask your accountant how to record it, and keep track of the balance still outstanding so you are not surprised by a busy January paid for in advance. Selling the card is usually not the moment the sale is taxed; redeeming it for a meal is. The guide on GST/HST and gift card sales explains how that works.

What should you do about lost gift cards?

Decide your policy before the first customer asks.

• Digital cards tied to an email or account can usually be checked and reissued to the right person.
• Physical cards behave like cash. Many restaurants cannot replace them without proof of purchase; say so clearly. A fee to replace a lost or stolen card is allowed, and no other new fee is, so state any replacement fee on the card terms.
• Keep a record of card numbers and balances.
• Apply the policy consistently.

What should you avoid with restaurant gift cards?

• Putting an expiry date on a paid gift card. In this province it is generally not enforceable, and it upsets customers.
• Unclear bonus terms. If the bonus has conditions, say so plainly.
• Forgetting to train staff. A guest who is told at the till that nobody knows how to apply their card does not come back.
• Treating gift card money as spent. A card sold in December is a meal you will serve later. Plan for it.

More from St. John's: Regatta Day and the George Street Festival and scheduling and labour standards.

More in the Canadian guides for food businesses.