MANILA, Philippines - Amid complaints about fraud and spike in interest rates and fees, the Bangko Sentral ng Pilipinas (BSP) has adopted new credit card rules to curb abusive practices.
The BSP's Monetary Board scrapped the issuance of pre-approved credit cards that are sent either through mail of delivered by courier.
It said such cards, which are voluntarily issued by banks or credit card companies to consumers who did not apply, "have exposed the public to cases of fraud."
Likewise, the central bank tightened collection practices, and expanded disclosure requirements on credit card transactions.
All cardholders should now be notified in writing 7 days before their account are endorsed to a collection agency.
The notification requirement, with 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 also required to ensure that collection agents disclose their true identity to cardholders amid mounting complaints of unfair practices.
On transparency in disclosures, credit card issuers 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 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 BSP said.
"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," the central bank noted.