DTI drafts rules on ‘downpayments’

By Joseph B.A. Marzan

 

The Department of Trade and Industry (DTI) on Thursday confirmed that its national office is preparing an order prohibiting limitations on how consumers pay for their purchases.

This after DTI Secretary Ramon Lopez on February 15, 2021 said at a hearing of the Senate Blue Ribbon Committee that they will be prohibiting motorcycle dealers from selling units on an “installment-only” basis.

The order would be based on the provisions of Republic Act No. 7394, which protects the consumer “against deceptive, unfair and unconscionable acts and practices”, as well as protection of their basic rights to choose.

DTI-Iloilo Provincial Director Judith Degala told Aksyon Radyo Iloilo that the order was in the works, but so far, nothing had been handed down to them.

“Nothing has been handed down to us as of this time. I do not know at which stage it is in right now. All we know is that it is being drafted right now by our Consumer Protection and Advocacy Bureau, the policy-making body of the DTI,” Degala said.

Degala clarified, however, that the order would not only cover motorcycle sales but also other products and services they regulate.

She added that neither DTI Iloilo nor even the DTI regional office had received any complaints regarding motorcycle sales.

“I would have to clarify. This Department Administrative Order does not single out motorcycles. This covers all establishments that offers products or services. The point here is that the complaints came up in NCR and Luzon, but so far, we haven’t received any complaint here in Iloilo,” she added.

She also explained that the motorcycle dealers’ practice of limiting payment options was “unfair and unconscionable” to the customer because it “took advantage” of the consumer environment which was “grossly inimical or one-sided” to the seller.

She said that same as the right of the consumer to choose a product of their liking, they also have the right to choose how they will pay for the products and services they avail.

“When you say ‘cash payment only’, you are denying the consumer the exercise of their right to choose, including choosing the mode of payment they prefer. The practice of motorcycle dealers in limiting to installment payments, we can say this is unfair or unconscionable, it becomes more expensive and unfair to the consumer. They had already been denied the right to pay in cash which is more affordable for them. It takes advantage of the general conditions of the environment, which induces the consumer to enter into a sales transaction which is grossly one-sided in favor of the seller,” she explained.

As to the rates of installment, Degala said the law does not provide any cap on additional payments.

She said that what mattered to the DTI was that the dealers provided the prices on both cash basis and prices on an installment basis.

“We do not have any fair-trade law as basis or reference to put in a cap. For us in the DTI, what matters is that the business establishment is transparent. Beside the product, the price on cash payment and on installment payment are displayed, how much will they pay within 6 months or 12 months. The consumer would then have comparison, and they can be able to choose,” Degala said.

During the Senate hearing, Sec. Lopez revealed that the DTI had received 3,060 consumer complaints on motorcycles, including non-release of official receipt and certificate of registration (OR/CR) and certificates on full payment, defective units, and restricting sales on an installment basis even when consumers can pay the full value in cash.

Out of these complaints, Lopez said only 287 complaints had been resolved through mediation, while the remaining 2,633 were referred to the Land Transportation Office (LTO), an attached agency of the Department of Transportation (DOTr).