The recently promulgated law involving credit cards is Republic Act No. 10870 entitled “An Act Regulating the Philippine Credit Card Industry”. Among the notable provisions in said law is Section 21 which requires the credit card companies to inform the credit card holders of their accredited collection agencies. Said law provides that:
“SEC. 21. Endorsement of Credit Card Debt Collection by the Credit Card Issuer to a Collection Agency. - A credit card issuer shall inform its cardholder in writing of the endorsement of the collection of the account to a collection agency, or the endorsement of the account from one collection agency to another, prior to the actual endorsement. The notification shall include the full name of the collection agency and its contact details. The requirement to notify a cardholder in writing about the endorsement of the account to the collection agency shall be included in the terms and conditions of the credit card agreement: Provided, That the credit card issuer shall refer the collection of an account to only one collection agency at any one time.”
This portion of the law is significant considering that most credit card holders are being contacted by unauthorized collection agencies. This tactic is prevalent and once a credit cardholder is deceived, only then will these unauthorized collection agencies contact the concerned credit card companies.
Thus, the first step once a collection agent contacted a credit cardholder is to require or ask for this endorsement. Most often than not, these unauthorized collection agencies will stop contacting the cardholder if they are solicited with this requirement.
Another important provision of this law is Section 19 which states that:
“SEC. 19. Appropriate Manner of Collection. - A credit card issuer may resort to all reasonable and legally permissible means to collect amounts due them under the credit card agreement: Provided, That in the exercise of its rights and performance of duties, they must observe good faith, reasonable conduct and proper decorum and refrain from engaging in unscrupulous acts.
A credit card issuer or collection agent shall not harass, abuse or oppress any person or engage in any unfair practices, as may be defined by BSP rules and regulations, in connection with the collection of any credit card debt.”
This provision on non-harassment is very substantial considering that most, if not all, credit card holders are being harassed. It thus protects the cardholders and provides remedies in case it happens.
If there are violations of these provisions of law, please note that the same is also penal or criminal in nature. Section 27 of this law provides that:
“SEC. 27. Violation of this Act and Other Related Rules, Regulations, Orders or Instructions. - A person who willfully yiolates any provision of this Act or any related rules, A regulations, order or instructions, issued by the Monetary Board shall be punished by imprisonment of not leas than two (2) years nor more than ten (10) years, or by a fine of not less than fifty thousand pesos (P50,000.00) but not more than two hundred thousand pesos (P200,000.00), or both, at the discretion of the court.”
Another relevant law is Republic Act No. 8484 entitled “An Act Regulating the Issuance and Use of Access Devices, Prohibiting Fraudulent Acts Committed Relative thereto, Providing Penalties and for other Purposes”. Regrettably, this law is generally friendly to credit card companies. In fact, most often than not, this is the law being cited in their demand letters.
In this regard, cardholders must be aware of Section 14 last paragraph which warns as follows:
“- A cardholder who abandons or surreptitiously leaves the place of employment, business or residence stated in his application or credit card, without informing the credit card company of the place where he could actually be found, if at the time of such abandonment or surreptitious leaving, the outstanding and unpaid balance is past due for at least ninety (90) days and is more than Ten thousand pesos (P10,000.00), shall be prima facie presumed to have used his credit card with intent to defraud.”
It is a common mistake by most cardholders not to inform the credit card companies of any change in address. Among the reasons, is to avoid calls from collection agents or maybe simply due to inadvertence. Thus, considering this provision of law, it is recommended that cardholders should always be transparent to credit card companies especially with respect to change in addresses.
If a cardholder has further concerns, it is worthwhile to read further Republic Act 10870 and 8484.