Central bank tightens rules on credit cards

ISSUANCE of pre-approved credit cards is no longer allowed based on amendments made by the Monetary Board of the Bangko Sentral ng Pilipinas (BSP) on credit card rules, which also tighten collection practices.

Under the new guidelines, the issuance of pre-approved cards will no longer be allowed to enhance consumer protection.

Monetary authorities argued that pre-approved cards sent either through mail or courier have exposed the public to fraud by way of unauthorized use of the cards.

Collection practices have also been tightened.

The board requires credit card issuers to notify in writing cardholders, seven days before an account is endorsed to a collection agency.

The notification requirement, which should also include the full name of the collection agency and its contact details, will give cardholders enough time to consider whether it will be good for them to settle before their accounts are endorsed to collection agents.

The BSP said that credit card companies must ensure that collection agents disclose their true identity to cardholders.

“This move is to address mounting complaints regarding unfair collection practices by some collection agents,” it added.

Disclosure requirements have also been expanded by the new regulation.

Credit card issuers, are now required to print using the minimum Arial 12 theme font size, a table of applicable fees, penalties and interest rates on credit card transactions.

According to the BSP, these will be included in all marketing materials and in the billing statements, and shall include the manner of and reason for the imposition of such penalties, fees and applicable conversion reference rates for third-currency transactions.

Cardholders will also be constantly reminded through the credit card billing statements that payment of only the minimum amount due or amount less than the total amount due for a billing cycle would automatically mean the imposition of interest and other charges, the Monetary Board said.

The amendments approved by the board include reminder of the applicability to credit card transactions of Republic Act (RA) 7394, or the Consumer Act of the Philippines and RA 8484, or the Access Devices Regulation Act.

The new guidelines on disclosures, unfair collection practices and confidentiality of information apply not only to credit cards but also to other lending operations of all BSP-supervised institutions, other than pawnshops.–Lailany P. Gomez Reporter, Manila Times