House Bill 5417
House Bill 5417
House Bill 5417
SlXTEENTII CONGRESS
Second Regular Session
HOUSE OF REPRESENTATIVES
H. No. 5417
fair and sound consumer credit practices which are aligned with global best
card services. To ensure the vibrancy and efficiency of the credit card industry,
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the State shall institute appropriate mechanisms to protect and educate credit
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cardho Iders.
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SEC. 3. Scope and Coverage. - This law shall govern all credit card
issuers, acquirers and all credit card transactions.
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supervise all credit card issuers and acquirers. Supervision shall include the
following:
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(c) Overseeing to ascertain that laws and regulations are complied with.
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The BSP may also limit and prohibit the charging of annual membership
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fees for credit cards. In the exercise of its authority to limit and prohibit these
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(1) The purpose for the fees including the cost of production of the
credit card;
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(3) The other charges and fees already imposed for credit cards;
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adopt.
SEC. 5. Definition of Terms. -
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the credit card issuer and the cardholder that gives the credit card issuer the
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(b) Acquirer refers to the institution that accepts and facilitates the
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merchant;
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(c) Balance transfer refers to the transfer of the balance in a credit card
account to another credit card account;
(d) Billing cyclelbilling period refers to the period of time between
billings. Billing cycles shall comprise at least fifteen (15) days;
(e) Card association refers to any company that provides credit card
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(f) Cash advances refer to cash obtained from the credit card account
in any manner availed by the cardholder;
(g) Credit card refers to any card or other credit device intended for the
purpose of obtaining money, property, or services on credit;
(h) Credit card issuer refers to a bank or a corporation that offers the
use of its credit card;
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(i) Credit card limit refers to the maximwn total amount for purchases,
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cash advances, balance transfers, and finance charges, service fees, penalties,
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an amount less than, the minimwn amount due or minimum payment required,
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all credit card transactions in accordance with the terms and conditions
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(n) Membership fee refers to the amount a credit card issuer levies for
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the right to use its credit card and acquire access to other membership
benefits. This may also be referred to as annual membership fee, annual fee,
due date for a particular billing cycle/bilIing period which may include:
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in time;
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(q) Statement cut-oj[ date refers to the end date of a billing cycle as
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statement listing of the purchases, payments and other debits and credits made
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cardholder.
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Card Issuers. - To effectively deliver services and at the same time safeguard
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their interests, the credit card issuer and acquirer must establish an appropriate
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system for managing risk exposures arising from credit card operations. Such
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manner, and shall cover the organizational set-up for the institution engaged in
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or unit handling the credit card business, its information management system,
Before issuing credit cards, credit card issuers must conduct know-your-client
possess good credit standing and are financially capable of fulfilling their
credit commitmenL~.
SEC. 8. Service Level Agreement. - There shall be, in the service level
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of the cardholders.
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Credit card issuers shall determine, based on the credit standing and financial
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The card issuers may thereafter implement changes in the credit limit
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Provided, further, That any credit limit increase may be declined by the
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cardholder: Provided, finally, That the cardholder has the option to request for
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a credit limit adjustment subject to the approval of the credit card issuer.
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SEC. 10.
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disclose to all credit cardholders and potential credit cardholders the following
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information:
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(a) Finance charges for unpaid amounts after payment due date;
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(b) The percentage that the interest bears to the total amount to be
financed expressed as a simple monthly or armual rate, as the case may be, on
(c) The
default,
late
payment/penalty
fees
or
similar
That late payment or penalty fees shall be based on the unpaid minimum
the late payment or penalty fees may be based on the total outstanding balance
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terms or deferred payment schemes, if the contract between the issuer and the
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(d) The method of determining the balance upon which interest and/or
delinquency charges may be imposed;
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over-the-Iimit fees, collection fees, credit investigation fees and attorney's fees;
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cardholders in any currency other than the billing currency, the marmer of
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conversion rates;
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equivalent document, that payment of only the minimum amount due or any
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amount less than the total amount due for the billing cyclelbilling period,
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"Importaut Reminder: Paying less than the total amount due will increase the
amount of interest you pay and the time it takes to repay your balance"; and
A written
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In addition to the
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detailed explanation and a clear illustration of the matUler by which all charges
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The repayment information shall also include the number of months (rounded
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to the nearest month) that it would take to pay the entire amount of that balance
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Compliance with this section may be deferred for such reasonable time
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as the BSP may determine within which credit card issuers should modifY their
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systems accordingly.
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processed subject to the discretion of the credit card issuer: Provided, That no
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such fees are clearly and prominently disclosed in the table offees and charges.
SEC. 13. Lost or Stolen Card. - In case a credit card is lost or stolen,
any transaction made prior to reporting to the credit card issuer shall be for the
officers, employees and agents shall keep strictly confidential the data on the
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(d) When disclosure to third party service providers is necessary for the
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necessary for the sole purpose of insuring the credit card issuer from
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cardholder default or other credit loss, and the cardholder from fraud or
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and acquiring.
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consumer assistance unit within its organization which shall be responsible for
and requests.
issuer shall give cardholders up to sixty (60) calendar days from statement date
to report any error or discrepancy in their billing statement. The credit card
issuer shall take action within ten (l0) business days from receipt of such
notice.
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may resort to a1l reasonable and legally permissible means to collect amounts
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due them under the credit card agreement: Provided, That in the exercise of its
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rights and performance of duties, they must observe good faith, reasonable
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conduct and propcr decorum and refrain from engaging in unscrupulous acts.
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BSP rules and regulations, in cOllllection with the collection of any credit card
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debt.
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may engage qualified third party service providers/collection agents for the
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Card Issuer to a Collection Agency. - A credit card issuer shall inform its
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include the full name of the collection agency and its contact details. 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
credit card issuer or its collection agency may communicate with a credit
cardholder in connection with the collection of any debt through the mode or
modes prescribed by the BSP in guidelines it shall issue for this purpose.
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if the payment due date for a credit card falls on weekends and regular national
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holidays, the card payment due date is automatically moved to the next
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business day. Payment through any authorized mode, made to any accredited
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payment centers of the credit card issuer shall be considered as payment to the
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from a cardholder whose account carries different interest rates for different
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the credit card issuer shall apply amounts in excess of the minimum payment
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amount first to the tees and charges, and then to the billed balance bearing the
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highest rate of interest, followed by the billed balance bearing the next higher
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rate of interest, until the payment is exhausted: Provided, That the original
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rates for promotional offers shall be the basis for determining hierarchy of
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payment.
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terminate account anytime: Provided, That the cardholder either pays in full
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New Central Bank Act", shall be made applicable to any credit card issuer,
acquiring bank, their directors and officers including, but not limited to, the
sanctions against the culpable persons provided in Section 25 hereof, for any
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administrative sanctions that may be imposed, the authority of the credit card
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The
SEC. 25. Violation of this Act and Other Related Rules, Regulations,
A person who willfully violates any provision of
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Orders or Instructions. -
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this law or any related rules, regulations, order or instructions, issued by the
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Monetary Board shall be punished by imprisonment of not less than two (2)
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. years nor more than ten (10) years, or by a fine of not less than fifty thousand
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pesos (P50,OOO.00) but not more than two hundred thousand pesos
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that are not supervised by the BSP are hereby given such reasonable time
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the Monetary Board may determine in order to comply with applicable rules
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and regulations.
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hereof which are not affected thereby shall continue to be in full force and
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effect.
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SEC. 29. Effectivity. - This Act shall take effect fifteen (15) days after
its publication in the Official Gazette or in at least two (2) national newspapers
of general circulation.
Approved,