Senate President Pro Tempore Jinggoy Ejercito Estrada has filed a bill banning the issuance of pre-approved credit cards to individuals who did not apply for them.

Although such practice is already provided under Bangko Sentral ng Pilipinas (BSP) Circulars Nos. 702 and 845 issued on December 15, 2010 and August 15, 2014, Estrada said he sees the necessity to pass a law institutionalizing this prohibition.

However, he noted there are reports that pre-approved credit cards continue to be issued to unsuspecting consumers.

As such, the senator filed Senate Bill No. 2952, or the proposed Pre-Approved Credit Card Prohibition Act.

“May mali sa gawaing ito lalo na kung walang consent o pahintulot ang credit card user na mabigyan ng pre-approved credit card (There’s something wrong with this practice especially if the credit card user doesn’t have consent to be given a pre-approved credit card),” Estrada said.

“Para sa walang disiplina sa paggastos, debt trap ito. Dapat igalang ng mga bangko at credit card companies ang karapatan ng mga indibidwal na magpasya sa kanilang mga financial transactions (For someone who don’t practice fiscal discipline, this is a debt trap. Banks and credit card companies should respect an individual’s rights to decide on their financial transactions),” he said.

The senator said the measure seeks to strengthen the prohibition on the issuance of pre-approved credit cards to consumers and provide for heavier penalties for violators.

“The credit card provider must prove that its client read and consented to the terms and conditions governing the credit card's use. Failure to prove consent means that the client cannot be bound by the terms and conditions of the credit card,” Estrada said in the explanatory note of the bill.

The bill primarily prohibits the practice of sending credit cards to consumers without prior application or supporting documents.

It also prohibits the practice of sending unsolicited supplementary cards or cards with additional features that are not replacements for existing cards.

Additionally, the bill also bans unsolicited calls offering credit cards as rewards for using other financial products, informing depositors that they have automatically been issued a credit card due to their good standing, and mailing credit cards considered accepted upon receipt without prior consent of the consumer.

The bill also seeks to prohibit the granting of free credit cards to customers availing of other financial services.

At the same time, SB 2952 also prohibits credit card collection agents from engaging in any form of harassment or unethical collection activities to consumers who use pre-approved credit cards.

Stringent penalties await any bank, credit card or financial institution that would violate any of the provisions in the proposed law.

For first time offenders, the directors and officers of the credit card issuer responsible for the violation will face censure and a fine of P300,000; a second offense will result in the suspension of the credit card issuer from the credit facilities of the BSP and a fine of P500,000.

In the event of a third offense, the issuer will face the revocation of their license to engage in the credit card business and shall pay a fine of P800,000.