BSP reminds credit card issuers to be fair

MANILA, Philippines –  The Bangko Sentral ng Pilipinas (BSP) has reminded credit card issuers and their collection agents to respect the rights of their clients and to refrain from engaging in unfair collection practices.

In a statement, the BSP likewise told credit cardholders that the BSP has existing regulations that are meant to provide for credit card debt collection methods that are reasonable and legally permissible.

The central bank pointed out that credit card issuers and their collection agents are required to observe good faith and refrain from engaging in unscrupulous or untoward acts, to the extent of harassing and humiliating credit cardholders.

For one, issuers and collection agents should not use violence or other criminal means to harm the physical person, reputation, or property of any person and should not use obscenities, insults, or profane language that amount to a criminal act or offense under applicable laws.

Furthermore, credit card issuers and their agents should not disclose the names of credit cardholders who allegedly refuse to pay debts and should not threaten to take any action that could not legally be taken.

Likewise, any false representation or deceptive means to collect or attempt to collect any debt or to obtain information concerning a cardholder is also prohibited.

The BSP also prohibits issuers and their agents from making contact at unreasonable or inconvenient times or before 6 a.m. or after 10 p.m. unless the account is past due for more than 60 days or the cardholder has given express permission or said times are the only reasonable or convenient opportunities for contact.

Earlier, the BSP issued Circular No. 702 series of 2010 tightening its rules and regulations on the issuance of credit cards as well as practices of collecting agencies due to the proliferation of fake cards and mounting consumer complaints.

The new guidelines prohibit banks and their affiliate credit card companies from issuing pre-approved cards on concerns that pre-approved cards sent either through the mail or delivered by courier have exposed the public to cases of fraud via unauthorized use of their cards.

It also tightened collection practices as banks and credit card companies are now required to notify cardholders in writing within seven days before any account is endorsed to a collection agency.

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

It added that that the new rules require credit card companies to ensure that collection agents disclose their true identity to cardholders in order to address mounting complaints regarding unfair collection practices by some collection agents.

The BSP has also expanded the disclosure requirements that now require banks and credit card companies to print using the minimum Arial 12 theme font size, a table of the applicable fees, penalties and interest rates on credit card transactions.

“This table 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,” the circular stated.

Banks and credit card issuers are also required to constantly remind their cardholders through the credit card billing statements that payment of only the minimum amount due or any amount less than the total amount due for a billing cycle would automatically mean the imposition of interest and other charges.

The amendments approved by the MB include explicit reminder of the applicability to credit card transactions of Republic Act 7394 or Consumer Act of the Philippines that provides that consumers shall pay the same price for a purchase regardless whether this is paid by cash or by a credit card.

The credit card transactions, the BSP explained, is also covered by RA 8484 or the Access Devices Regulation Act that applies to credit cards as it defines the liabilities of credit card holders when credit cards are stolen, among others.

It added that new regulations on disclosures, unfair collection practices and confidentiality of information would apply not only to credit cards but to other lending operations of all BSP-supervised institutions as well, other than pawnshops.

Latest data showed that more and more consumers are turning to their credit cards instead of using cash to pay for goods or services acquired as the bank’s credit card receivables increased by 4.9 percent as of the end of the first half of the year. Credit card receivables of universal, commercial, and thrift banks amounted to P135.89 billion as of end-June this year or P6.33 billion more than the P129.56 billion registered in the same period last year as consumers turned to their credit cards to finance the purchase of goods and services.

The amount was also P5.24 billion higher than the P130.65 billion receivables registered in the first quarter of the year. -Lawrence Agcaoili (The Philippine Star)