Credit Card Collection in the Philippines: What Collectors Can (and Cannot) Do Under BSP Rules and R.A. 10870

 

If you own a credit card in the Philippines, you’ve probably heard horror stories about collection agents:

– Calling late at night

– Shouting or insulting the cardholder

– Threatening arrest or public “shaming”

Many of these tactics are not just unethical – they can be illegal or prohibited.

1. Who regulates credit card collection?

Under R.A. 10870, the Bangko Sentral ng Pilipinas (BSP) is the main regulator of the credit card industry, including how banks and collection agencies collect from cardholders.

“A credit card issuer 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 its rights and performance of duties, they must observe good faith, reasonable conduct and proper decorum and refrain from engaging in unscrupulous acts.”

— RA 10870 (2016)

In simple terms:

• Banks and their collection agents may collect,
• But they must follow good faith, reasonable conduct and proper decorum, and
• They must not engage in unscrupulous acts.

R.A. 10870 also gives the BSP power to issue more detailed rules and to penalize violators.RA 10870 (2016)

2. What collection practices are NOT allowed?

R.A. 10870 is very clear:

"A credit card issuer or collection agent shall not harass, abuse or oppress any person or engage in any unfair practices, as may be defined by BSP rules and regulations, in connection with the collection of any credit card debt.”

— RA 10870 (2016)

Combining this with BSP’s older guidance on “unfair collection practices” (like Circular 454) and later consumer‑protection standards, the following acts are generally problematic and may be considered harassing or unfair (depending on the exact facts):

• Threats of violence or harm to the debtor or family
• Using profane, obscene, or insulting language
• Repeated calls at unreasonable hours (e.g., very late at night or very early morning) purely to pressure or harass
• Public shaming tactics, like calling employers, officemates, or neighbors and disclosing the debt solely to embarrass the debtor
• False threats of arrest or criminal cases for pure non‑payment of credit card debt (which is civil in nature, absent fraud)
• Misrepresenting that the caller is from a “government agency” or a “law office” when that is not true

The exact wording of the prohibition will depend on the applicable BSP circulars and manuals, but the core principle is the same: no harassment, no abuse, no unfair practices.

3. Can banks use third‑party collection agencies?

Yes. R.A. 10870 expressly allows banks to hire collection agencies, but with strict conditions.

“A credit card issuer may engage qualified third party service providers/collection agents for the purpose of assisting or rendering services in the administration of the credit card business including recovery of unpaid obligations and enforcement of rights against the cardholder.”

— RA 10870 (2016)

But:

“A credit card issuer shall inform its cardholder in writing of the endorsement of the collection of the account to a collection agency, or the endorsement of the account from one collection agency to another, prior to the actual endorsement. The notification shall include the full name of the collection agency and its contact details…: Provided, That the credit card issuer shall refer the collection of an account to only one collection agency at any one time.”

— RA 10870 (2016)

So:

• The bank must notify you in writing before turning your account over to a collection agency (and each time it changes agencies).
• The notice must include the name and contact details of the agency.
• Your account can be handled by only one collection agency at a time.
• If you are being hounded by multiple agencies at once, or you never received written notice from the bank about the endorsement, that may be inconsistent with R.A. 10870.

4. How may collectors contact you?

R.A. 10870 tells us that the mode of communication in connection with collection must follow BSP‑prescribed guidelines:

“The credit card issuer or its collection agency may communicate with a credit cardholder in connection with the collection of any debt through the mode or modes prescribed by the BSP in guidelines it shall issue for this purpose.”

— RA 10870 (2016)

This means:

The BSP can limit or regulate how collectors may contact you (e.g., calls, texts, emails, letters, social media).

Collectors must follow those BSP guidelines plus the general rule of good faith, reasonable conduct, and proper decorum.

5. What are the penalties for violations?

R.A. 10870 gives the BSP power to impose administrative sanctions on banks and their officers that violate the law or BSP rules:

“The provisions of Section 37 of Republic Act No. 7653, otherwise known as ‘The New Central Bank Act’, shall be made applicable to any credit card issuer, acquirer, their directors and officers… for any willful violation of this Act or any related rules, regulations, orders or instructions issued by the Monetary Board…”

On top of that:

“A person who willfully violates any provision of this Act or any related rules, regulations, order or instructions, issued by the Monetary Board shall be punished by imprisonment of not less than two (2) years nor more than ten (10) years, or by a fine of not less than fifty thousand pesos (P50,000.00) but not more than two hundred thousand pesos (P200,000.00), or both, at the discretion of the court.”

So, in serious cases, abusive or unlawful collection practices can lead not just to BSP sanctions, but also to criminal liability.

6. What can you do if you experience abusive collection?

If you believe a bank or its collection agency is violating your rights:

• Document everything
• Take screenshots of texts, emails, chats.
• Record call details (date, time, number, what was said).
• Keep copies of letters or notices.
• Report to the bank’s Customer Assistance Unit (CAU)
• R.A. 10870 requires issuers to have a customer assistance unit responsible for complaint handling.
• Escalate to the BSP

If the bank does not act, or the abusive behavior continues, you may file a complaint with the Bangko Sentral ng Pilipinas, attaching your evidence and narrating the abusive practices.

Consult a lawyer

Depending on the facts, there may be grounds for:

• Civil actions (e.g., damages for harassment or breach of privacy), and/or
• Complaints invoking R.A. 10870 and BSP rules.

Disclaimer: This post is for general information only and is not a substitute for legal advice. If you are facing a specific collection problem, consult a lawyer who can review your documents and the exact conduct of the bank or collection agency.