DTI Bans “Installment Only” Mode Of Payment For Consumer Goods

The DTI issued an administrative order banning the “installment only” mode of payment for consumer goods.

The Department of Trade and Industry (DTI) had issued an administrative order banning the “installment only” mode of payment for consumer goods.

The DTI issued an administrative order banning the "installment only" mode of payment for consumer goods.
Photo source: CNN Philippines

Under the Department Administrative Order No. 21-03 issued last March 23, 2021, consumers must be given an option to pay in cash, installment, or the combination of the two modes of payment.

The selling price of a certain product should be the same regardless of a customer’s mode of payment through credit or debit cards, electronic fund transfers, QR codes, and other digital means.

According to Trade Undersecretary for Consumer Protection Group Ruth Castelo, the order was issued after the agency received many complaints — especially from buyers of motorcycles — that consumers were only allowed to pay on an “installment only” basis regardless of modes of payment.

As we dug deeper, we found that this has been a practice that is proliferating in the market,” Castelo told CNN Philippines’ Traffic Center.

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Under the said order, the seller can’t impose rates higher than the prevailing market interest rate.

Castelo also said that companies or distributors that have in-house financing schemes were imposing monthly interest rates of at least an 8.33 percent in installment-only payments, adding that the rate was way higher than the monthly credit bank rates of 2 percent to 4 percent.

In addition, Castelo said that both the consumer and the seller must agree on the interest rate before a certain product can be purchased. Also, the seller can’t collect advance interest for over one year.

For bigger items, the seller was required to release documents that will show ownership of the buyer and must comply with the requirements in case of repossession of products procured on installment.

Violators of the said order will be imprisoned and fined in accordance with the penalties stipulated in Republic Act 7394 or the Consumer Act of the Philippines.

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