BSP tightens credit card rules

By Lawrence Agcaoili (The Philippine Star) Updated December 21, 2010 

MANILA, Philippines – The Bangko Sentral ng Pilipinas (BSP) has tightened 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.

BSP Governor Amando Tetangco Jr. issued BSP Circular No. 702 series of 2010 amending the regulations to enhance consumer protection in the credit card operations of banks and their subsidiary or affiliate credit card companies.

The new guidelines signed by Tetangco last Dec. 15 prohibits 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 tigthened 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.