Retailers would place money from gift cards sales in escrow to protect customers in an event of a corporate collapse - like that of Dick Smith - under changes to the law demanded by Independent Senator Nick Xenophon.

In the wake of electronics retailer Dick Smith's collapse last week, Senator Xenophon has called for legislative changes so that customers with gift cards and who have paid deposits are not left in the lurch. This is in addition to calls for a senate inquiry.

He has proposed a three-pronged approach. Firstly, there should be an obligation on external administrators to honour gift cards and to give customers greater priority.

At present, receiver Ferrier Hodgson considers gift card holders - some holding ones worth $1200 - as unsecured creditors of the group.