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Banks may resort to legally permissible means to collect amounts due them under the credit card agreement
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Banks may engage qualified third-party service providers or collection agents for the purpose of assisting in the administration of the credit card business
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A bank or its service provider or collection agent may communicate with a credit cardholder in connection with the collection of any debt
Republic Act No. 10870 or the Philippine Credit Card Industry Regulation Law allows banks to resort to all reasonable and legally permissible means to collect amounts due them under credit card management. In the exercise of the banks of their rights and performance of duties, they must observe good faith, reasonable conduct and proper decorum, and refrain from engaging in unscrupulous acts.
May banks engage qualified third-party service providers for the administration of the credit card business?
The law says:
Banks may engage qualified third-party service providers or collection agents for the purpose of assisting or rendering services in the administration of the credit card business, including recovery of unpaid obligations and enforcement of rights against the cardholder provided that the engagement is in accordance with Bangko Sentral regulations on outsourcing as applicable. The outsourcing agreements shall be covered by a Service Legal Agreement covering the responsibilities and accountabilities of each party.
However, even with the contractual agreement between a bank and service provider or collection agent, the bank shall be responsible to its customers for maintaining customer service standards, without prejudice to further recourse, if any, by the bank to the service provider or collection agent.
Furthermore, a bank or its service provider or collection agent may communicate with a credit cardholder in connection with the collection of any debt through acceptable and reasonable modes. They shall not harass, abuse or oppress any cardholder or any person, or engage in any unfair practices in the collection of credit card debt.
The following activities are considered as guidelines and are not irrebutably presumed to be unfair collection practices. Conversely, not all practices which might under the circumstances be termed unfair are mentioned here. The Monetary Board of the Bangko Sentral ng Pilipinas may now and then consider any other acts/omissions as unfair collection practices:
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the use or threat of violence or other criminal means to harm a person, or his/her reputation or property;
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the use of obscenities, insults, or profane language which amount to a criminal act or offense under applicable laws;
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disclosure of the names of credit cardholders who allegedly refuse to pay debts, except as allowed under the law;
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threat to take any action that cannot legally be taken;
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communicating or threatening to communicate to any person or entity, credit information which is known to be false, including failure to communicate that a debt is being disputed;
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any false representation or deceptive means to collect or attempt to collect any debt, or to obtain information concerning a cardholder; and
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making contact at unreasonable or inconvenient hours, defined as contact before 6:00 A.M. or after 10:00 P.M., unless the cardholder has given express permission, or said times are the only reasonable or convenient opportunities for contact.
Banks shall inform their cardholder in writing of the endorsement of the collection of his or her account to a collection agency or agent, or the endorsement of the account from one (1) collection agency or agent to another, at least seven (7) business days prior to the actual endorsement. The notification shall include the full name of the collection agency and its contact details. The requirement to notify in writing shall be included in the terms and conditions of the credit card agreement provided that the bank shall refer the collection of an account to only one collection agency or agent at any one time.
Alburo Alburo and Associates Law Offices specializes in business law and labor law consulting. For inquiries, you may reach us at info@alburolaw.com, or dial us at (02)7745-4391/0917-5772207.
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