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DTI bans installment-only purchase schemes

THE SALE of consumer goods through installment-only purchase schemes has been banned by order of the Department of Trade and Industry (DTI).

Consumers must be given options to pay the full amount in cash, by installment, or through a combination of both methods, according to DTI Administrative Order 21-03 signed on March 23.

Sellers may still offer discounts for cash payments. But the selling price, the department added, should be the same if payment is made via debit, credit and prepaid cards, QR codes, electronic fund transfers, and other digital means.

A list of the available payment options must be posted visibly within the business premises, presented to facilitate consumer understanding of the choices. The list must also appear in the seller’s website or mobile application.

Trade Secretary Ramon M. Lopez in February said the department has received reports that vehicle dealers are encouraging consumers to buy only on an installment basis, and said at the time that buyers must have the choice to pay the full amount in cash to avoid interest. It is possible, he said, that dealers get incentives from financial institutions for insisting on installment-only payment.

According to the order, sales transactions done via installment should carry no interest unless stipulated in writing. The seller cannot impose rates higher than the market interest rate and cannot collect advance interest for longer than one year.

Buyers must be informed of all fees and charges.

Sellers must give buyers copies of transaction and ownership documents, and must follow due process when repossessing a product bought on installment.

Violators may be subject to fines or imprisoned under the Consumer Act or Republic Act No. 7394. — Jenina P. Ibañez

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