Prepaid Passes and Purchase Cards

Consumer Protection Legislation in provinces across Canada either exclude or except prepaid purchase cards from their “gift card” provisions. However, different provinces have different rules regarding expiry dates for these types of cards.

Any type of class pass or prepaid purchase card refers to a consumer purchase allowing for a specific number of goods or services. For fitness clubs, this may mean a specific number of drop-ins or classes. (i.e. a prepaid card that allows for ten drop-in sessions or classes.)

Province by Province Analysis

Prepaid purchase cards in Saskatchewan include prepaid vouchers, passes, and/or tickets that can be redeemed for goods or services sometime in the future. There is no time limit on these cards. They cannot have an expiry date in Saskatchewan.

While generally, prepaid purchase cards issued or sold for a specific good or service are permitted to expire in the majority of Canadian provinces, Saskatchewan falls outside of this generality.

British Columbia and Manitoba have similar legislation to that of Saskatchewan. Prepaid purchase cards cannot expire, but the legislation provides for limited exclusions with respect to the expiry of a prepaid purchase card. In these provinces, one of the exclusions is for a prepaid purchase card that is “issued or sold for a specific good or service” – such as specific fitness classes (therefore, may include an expiry if specified for a particular service).

Consumer Protection Legislation in Ontario recognizes prepaid purchase cards under “gift cards”. Generally, gift cards are not to have an expiry date in Ontario. However, similar to British Columbia and Manitoba, there is an exception for gift cards that covers only one specific good or service.

In Alberta, similar to the other provinces, a prepaid purchase card is prohibited from having an expiry date. However, this does not apply to promotional cards, loyalty cards, or cards sold for a specific purpose. If the prepaid purchase card does not have a specific cash value, then it is not to be included in the legislation and subsequently, may have an expiry date (such as a punch card or stamp card). In Alberta, as long as the prepaid purchase card does not reflect any cash value, it may have an expiry date.

Under the Consumer Protection Legislation in Newfoundland and Labrador, it is possible that a prepaid purchase cards fall under the category of “gift card”, which means that no expiry dates are not permitted. However, this is dealt with through Consumer Affairs on a case-to-case basis depending on facts.

In order to avoid any scrutiny, it is recommended that the best practice to avoid the “gift card” designation (and hence, non-expiry restrictions) under any province legislation would be to disclose to the customer up front (and perhaps in writing) that the prepaid purchase cards:

  1. a) have an expiry date,
  2. b) have no monetary value,
  3. c) are for a specific good or service (which should be specified), and
  4. d) are neither transferable nor refundable.

Any advertising of prepaid purchase cards should also clearly state the conditions.