Estrada wants ban on unsolicited pre-approved credit cards

MANILA – Senate President Pro Tempore Jinggoy Ejercito Estrada on Thursday called for a ban on unsolicited pre-approved credit cards’ issuance and heavier penalties on violators.

Estrada, who filed last month Senate Bill No. 2952 or the Pre-Approved Credit Card Prohibition Act, emphasized that while the Bangko Sentral ng Pilipinas (BSP) has already prohibited the practice through Circulars Nos. 702 (2010) and 845 (2014), some banks and credit card companies continue to issue pre-approved cards without consumer consent, exposing individuals to unwanted financial liabilities and potential fraud.

“This practice is wrong, especially when consumers are not aware they are being issued a credit card without their consent. For those who struggle with financial discipline, this could lead to a debt trap. Banks and credit card companies must respect the rights of individuals in making financial decisions,” he said.

The bill seeks to strengthen consumer protection laws by making it illegal for banks and financial institutions to:

–Issue pre-approved credit cards without a prior application, written request, or supporting documents.

–Send unsolicited supplementary credit cards or add new features to an existing card without consumer consent.

–Make unsolicited calls to offer credit cards as rewards for using other financial products.

–Automatically issue credit cards to depositors in good standing without their application.

–Send credit cards via mail that are deemed accepted upon receipt, unless explicitly activated by the recipient.

–Offer free credit cards as incentives for availing of other financial services.

Additionally, credit card collection agents will be prohibited from using unethical or harassing tactics to collect payments from consumers who unknowingly receive pre-approved credit cards.

To ensure compliance, Estrada’s bill proposes the following penalties for credit card issuers who violate the ban:

–First offense – Responsible directors and officers will face censure and a fine of PHP300,000.

–Second offense – The issuer will be suspended from BSP credit facilities and fined PHP500,000.

–Third offense – The issuer will face license revocation and a fine of PHP800,000.

Estrada emphasized that credit card providers must prove that a consumer has read and consented to the terms and conditions before being issued a credit card. Failure to do so means the client cannot be bound by any financial obligations associated with the card.

“This bill ensures that credit card issuers are held accountable for their actions, promoting ethical business practices and financial transparency,” he said.

The bill also aligns with Article XVI, Section 9 of the 1987 Constitution, which mandates consumer protection from trade malpractices, and Republic Act No. 7394 or the Consumer Act of the Philippines, which guarantees protection against deceptive, unfair, and unconscionable sales practices. (PNA)