Unfair collection tactics (Part 2)

One of the frequently asked questions during our 2-day seminar on “Legal/ Para-legal Tactics to Collect Seminar held in Grand Men Seng Hotel, Davao City was concerning debt collections and what they can and can’t legally do.

Well in the Philippines, when a debt collector is attempting to contact or locate the debtor and makes contact with anyone other than the debtor, the collector is required to identify him or herself and if requested, must identify their employer and it is imperative that the debt collector must not reveal that the debtor owes any money among other related details. Furthermore, when doing “telecollection” or collection call, it is very important to know that there is already a circular issued by Bangko Sentral ng Pilipinas last September 2004 regarding “Unfair Collection Practices”.                      

Always remember that when doing collection effort, one need not resort to "harsh or rude " collection practices or tactics in order to demand payment. We have to keep in mind that these debtors, even though how delinquent they may now, they are still your clients and it is through them that you have business. It is a good paradigm to value your customer in giving the highest quality service regardless of status and to value your corporate image and integrity as well. For me, collection is more of “an art”. The art of educating and convincing collection subjects or debtors that credit reputation and credit worthiness are the best collateral or security you can provide to your present and would-be creditors. Collection is not a one shot, single process effort, but should be regarded as a series of steps aimed at obtaining payment of accounts, while customer's goodwill is retained.                             

However, due to the numerous complaints filed by consumers on the tactics and “unfair” collection practices particularly of some independent collection companies which employs several “telecollectors”, the Bangko Sentral ng Pilipinas last September 2004 issued CIRCULAR 454 SECTION 7 …. Subsecs. X320.14 and 4301N.14 to read, as follows: Unfair Collection Practices. Banks, subsidiary/affiliate credit card companies, collection agencies, counsels and other agents may resort to all reasonable and legally permissible means to collect amounts due them under the credit card agreement: Provided, That in the exercise of their rights and performance of duties, they must observe good faith and reasonable conduct and refrain from engaging in unscrupulous or untoward acts. Without limiting the general application of the foregoing, the following conduct is a violation of this Subsection:  a) the use or threat of violence or other criminal means to harm the physical person, reputation, or property of any person; b) the use of obscenities, insults, or profane language which amount to a criminal act or offense under applicable laws; c) disclosure of the names of credit cardholders who allegedly refuse to pay debts, except as allowed under Subsec. X320.9 and 4301N.9; d) threat to take any action that cannot legally be taken; e) 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; f) any false representation or deceptive means to collect or attempt to collect any debt or to obtain information concerning a cardholder; and g) 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.

(Mr. Ed F. Limtingco can be reached at 0917-7220521 or at mailto:[email protected])