The Monetary Board (MB) recently approved amendments to credit card regulations aimed at enhancing consumer protection and fostering better transparency.
Under the new guidelines, issuance of pre-approved cards will no longer be allowed. The MB gave particular weight to 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 said cards.
Collection practices have likewise been tightened. The regulation will now require that all cardholders be notified in writing 7 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. Credit card companies are likewise required to 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.
Disclosure requirements have also been expanded by the new regulations. Credit card issuers, for instance, will now be required 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. Cardholders will also be constantly reminded 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 the Consumer Act of the Philippines (R.A. No. 7394) and the Access Devices Regulation Act (R.A. No. 8484). The former provides that consumers shall pay the same price for a purchase regardless whether this is paid by cash or by a credit card. The latter applies to credit cards as it defines the liabilities of credit card holders when credit cards are stolen, among others.
The new regulations mentioned above on disclosures, unfair collection practices and confidentiality of information apply not only to credit cards but extend to other lending operations of all BSP-supervised institutions, other than pawnshops.