How Does the CPA Affect My Salon Vouchers?
If you operate a salon, spa, or retail business, you probably make use of product and/or service vouchers on a regular basis.
But did you know that purchased vouchers—where a customer pays money for the voucher—are protected by Section 63 of the Consumer Protection Act (CPA)? This has several important implications for your business:
1. Vouchers may not expire within 3 years
A purchased voucher may not expire within three years of its date of issue. In other words, you cannot legally issue a voucher that expires after only 3, 6, or 12 months. Avoid terms such as “Valid for 6 months only” on purchased vouchers, as these may conflict with the CPA.
2. Partial redemption must be allowed
If only part of the voucher value is used, the remaining balance must remain available until the voucher has been fully redeemed or reaches its lawful expiry date. This means that you should maintain accurate records of voucher issue dates, redemption history, and outstanding balances. Please note that the CPA does not require a refund of any unused amount after the 3 years. You would be within your right to retain any used balances at expiry.
3. The voucher value belongs to the holder
The money paid for a voucher remains the property of the voucher holder until it is redeemed for goods or services. This may have implications for income tax, VAT, and accounting treatment. It is advisable to consult your accountant to ensure that vouchers are recorded and reported correctly.
4. Consider issuing vouchers with a Rand value
Although this is not a requirement of the CPA, some business advise: Where possible, issue vouchers with a Rand value rather than for a specific product or service. The cost of products and services may increase over time. For example, if a Cut & Blow Wave is currently priced at R500 and a client redeems the voucher two years later, the same service may cost R750 due to inflation and price increases.
By issuing a voucher with a Rand value instead of a specific service, you can avoid unexpected costs and pricing disputes in the future.
Promotional vouchers are different
It is important to distinguish between purchased vouchers and promotional vouchers.
Promotional, complimentary, competition, or loyalty reward vouchers generally do not enjoy the same protection as purchased vouchers because no payment was made for them. These vouchers can usually be governed by the specific terms and conditions of the promotion.
As a result, the CPA provisions outlined above may not apply in the same way to promotional vouchers.
In summary
If you sell gift vouchers, ensure that:
- They remain valid for at least three years.
- Partial redemption is permitted.
- Accurate records of balances are maintained.
- Voucher terms comply with the CPA.
- Promotional vouchers are clearly distinguished from purchased vouchers.
Recommended wording for your vouchers and policy
A few simple adjustments to your voucher policy can help protect your business while ensuring compliance with consumer legislation.
Short policy wording
Herewith a recommendation of a short policy wording that you can add to the fine print of your voucher itself:
This voucher is valid for 3 years from the date of issue. Redeemable for products and services only. Not exchangeable for cash. Any unused balance remains available until fully redeemed or expiry. Full terms and conditions available in-store and on our website.
Salon policy document
Click here for an example of a detailed Salon voucher policy that you may incorporate into your salon’s policy documents.