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DURING my vacation in Metro Manila last month, I came across an article captioned “Defend yourself from rude collection agents” by Joel V. Nigos, published in the Feb. 28, 2011 issue of the Philippine Daily Inquirer.

The article refers to consumer protection which is similar to the Fair Debt Collection Practices Act, a U.S. federal law.

Since I have written columns on the U.S. Fair Debt Collection Practices, I decided to write a comparative study of the Philippine regulations and the U.S. law on consumer protection.

Bangko Sentral ng Pilipinas circular

In the Philippines, consumer protection is under the jurisdiction of the Central Bank of the Philippines.

Under BSP Circular No. 454, the Central Bank of the Philippines issued regulations on unfair collection practices requiring credit card companies, collection agencies, counsels and other agents to resort to all reasonable and legally permissible means to collect amounts due them under the credit card agreement.

They are required to observe good faith, reasonable conduct, and refrain from engaging in unscrupulous or untoward acts.

The following acts are considered as violation of Circular No. 454:

1. Use of threat of violence or other criminal means to harm the physical person, reputation or property of any person.

2. Use of obscenities, insults or profane language.

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

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

5. Threat to communicate to any person false credit information, including failure to communicate that a debt is being disputed.

6. False representation or deceptive means to collect any debt or to obtain information concerning a cardholder.

7. Contacting the cardholder at unreasonable/inconvenient time before 6 a.m. or after 10 p.m. unless the credit cardholder has given permission to do so, or the account is past due more than 60 days.

U.S. law on consumer protection

The U.S. law on consumer protection is known as the Fair Debt Collection Practices Act.

The purpose of the law is to eliminate abusive practices in the collection of debts, to promote fair debt collection, and to provide consumers for disputing and obtain validation of debt information. (Wikipedia, the free encyclopedia.)

According to Wikipedia, the Fair Debt Collection Practices Act prohibits 14 types of abusive and deceptive conduct when attempting to collect debts.

I am listing only the most abused prohibited acts as follows:

1. Contacting consumers by telephone outside of the hours 8 a.m. to 9 p.m. local time.

2. Causing a telephone to ring or engaging any person in telephone conversation repeatedly or continuously with intent to annoy, abuse or harass any person of the called number.

3. Communicating with consumers at their place of employment after having been advised that this is unacceptable or prohibited by the employer. (Comment: This is the most abused conduct perpetuated by collectors.)

4. Seeking unjustified amounts, which would include demanding any amounts not permitted under an applicable contract or as provided under applicable law.

5. Identify themselves and notify the consumer, in every communication, that the communication is from a debt collector, and in the initial communication that any information obtained will be used to effect collection of the debt.

Remedies of consumers against debt collectors

Aggrieved consumers may file a private lawsuit in a state or federal court to collect damages from third-party debt collector.

The consumer need not prove actual damages in order to claim statutory damage of up to $1,000 plus reasonable attorney fees if a debt collector is proven to have violated the Fair Debt Collection Practices Act. (Wikipedia.)

Author’s comment

The Bangko Sentral ng Pilipinas regulations on the remedies for aggrieved consumers for violation of BSP Circular No. 454 is silent as to the penalties for violators, while the Fair Debt Collection Practices Act provides for penalties for violators of the Act.

The U.S. law on consumer protection is a federal law, while the Philippine version is merely a circular issued by the Central Bank of the Philippines regulating debt collectors with no penalty provisions.

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