Yes, you can decline a ‘pre-approved’ credit card offer

MANILA, Philippines – Remember: You have every right to decline a credit card offer from your bank or a credit card issuer that you did not apply for.

The Bangko Sentral ng Pilipinas (BSP) clarified on August 27 that a pre-approved credit card is “an unsolicited credit card issued by credit card issuers to consumers who have not applied for such credit card.”

Meanwhile, “application” is a “documented request of the credit card applicant to a credit card issuer for the availment of a credit card.”

“The intention and consent for the availment of the credit card must be clear and explicit,” BSP said in a statement.

The BSP’s Monetary Board approved Circular No. 845 dated August 15, 2014, reiterating the prohibition on the issuance of pre-approved credit cards and clarifying what are not allowed and considered “acts tantamount” to issuing pre-approved credit cards.

Based on the circular, the acts tantamount to issuing pre-approved credit cards include unsolicited calls by the bank to its depositors informing that they already have a credit card due to good standing as a depositor.

BSP said it is of “paramount concern” that the right of the consumer to refuse or agree to enter into a transaction is emphasized.

‘Most complained about’

The issuance of pre-approved cards is among the top 5 complaints on credit card operations despite the 2010 ban.

In its Resolution No. 1055 dated July 2, 2014, the BSP approved the issuance of a circular to clarify existing regulations prohibiting the issuance of pre-approved credit cards, pursuant to BSP Circular No. 702, Series of 2010.

The BSP Circular 702 issued on December 15, 2010, prohibits banks, quasi-banks, and their subsidiaries or affiliate credit card companies from issuing pre-approved cards.

Some credit card issuers sought to legitimize the issuance of pre-approved credit cards by contract stipulations on the issuance of additional cards, depending on the credit consumption and the payment history of the user.

The banks and credit card issuers have also been using “loyalty offers” as argument when it comes to issuing pre-approved cards.

Some also send unsolicited supplementary cards and other cards with added features which are not in replacement of or substitute to an existing cardholder’s initial credit card, BSP warned.

There are no exceptions to the BSP rule as these “may lead to possible abuses by financial institutions that decide what constitutes as ‘loyalty offer’ to clients.”

“This practice shall be discontinued by having the provisions of the Circular prevail over any contrary stipulations in the contract,” BSP said.

Credit card circular for further review

In a report to the Monetary Board, credit card related transactions continue to account for the highest number of complaints that the BSP’s Financial Consumers Affairs Group receives and processes.

“This calls for further review of the credit card circular,” BSP said.

The BSP added that banks should “enhance their rewards policy to their valued clients instead of granting pre-approved credit cards to them.”

The BSP requires banks and non-bank financial institutions with credit card operations to ensure that customers have a good credit standing and are financially capable to fulfill their obligations.

Some banks and credit card issuers previously argued that giving credit cards to existing customers are not considered pre-approved because they are existing customers and validation of information had already occurred in the past.

Financial consumers also complain about unfair collection practices, excessive charges, unauthorized/disputed charges, and fraudulent use due to lost or stolen credit cards. – Rappler.com

Image of hand holding various credit cards via Shutterstock