Unfair collection practices

The Bangko Sentral ng Pilipinas Manual of Regulations for Non-Bank Financial Institutions
(MORNBFI, Subsections 4320Q.14, page 136, and 4301N.14, page 810) classifies the following
as unfair collection practices:
1. The use or threat of violence or other criminal means to harm the physical person,
reputation, or property of any person;
2. The use of obscenities, insults, or profane language which amount to a criminal act or
offense under applicable laws;

3. Disclosure of the names of credit cardholders who allegedly refuse to pay debts;

4. Threat to take any action that cannot legally be taken;

5. Communicating or threat to communicate to any person credit information which is known

to be false, including failure to communicate that a debt is being disputed;

6. Any false representation or deceptive means to collect or attempt to collect any debt or to
obtain information concerning a cardholder; and

7. Making contact at unreasonable/inconvenient times or hours which shall be defined as

contact before 6:00 A.M. or after 10:00 P.M., unless the account is past due for more than
sixty (60) days or the cardholder has given express permission or said times are the only
reasonable or convenient opportunities for contact.

If you are a school principal or department head and you receive a telephone call from
collection agents about your teachers alleged delinquency, tell them that (1) they are violating
the BSP regulation, and (2) you will encourage the teacher to file a complaint against them for unfair
collection practices.

If you are the card holder and you were verbally abused by the card companys staff or its
collecting agent, you should file a complaint with the BSPs Financial Consumer Affairs
Group.

Additional protection for credit card holders under BSP Circular No. 702, Series of 2010

Section 4 of this circular released on December 15, 2010 amended the Manual of Regulations of
Banks (Subsection X320.14) and MORNBFI, (Subsections 4320Q.14 and 4301N.14). The circular
applies to all credit operations of banks and other BSP-supervised financial institutions to better
protect all financial consumers, including credit card holders.

Sections 3 and 4 of the circular require credit card companies to:

[1] notify the card holder in writing of the endorsement of the collection to an agency at least seven
days before the actual endorsement;

[2] give the defaulting credit card holder the name of the agent assigned to the account once they
have endorsed the collection to a third-party;

[3] change all disclosure documents and marketing materials so that they are printed in plain
language and in bold black letters against a white background using the Arial font and a minimum
12 point font size.

These new requirements protect the credit card holders:

by giving them enough time to consider what actions to take,
from being harassed by an unscrupulous collection agent who might use aliases or
pseudonyms in order to avoid the sanctions for using unfair practices; and

by providing them with easily understood documents from the credit card companies.

Sanctions for credit card companies or their collection agents

The sanctions for unfair collection practices under Section 6 of the circular are:

First offense: Reprimand for the directors/officers responsible for the violation.

Second offense: Disqualification of the bank concerned from the credit facilities of the BSP except as
may be allowed under Section 84 of R.A. No. 7653 (New Central Bank Act).

Subsequent offenses:
Prohibition on the bank concerned from the extension of additional credit accommodation
against personal security; and
Penalties and sanctions under Sections 36 and 37 of RA 7653