Issuing banks often ignore cardholders' complaints

Sudibyo M. Wiradji, Contributor, Jakarta

Many local banks still do not pay enough attention to complaints filed by their customers despite the introduction of consumer protection law in 1999, which, among other things, gives customers the right to information on payment for which they might be charged.

The cardholders are often confused, frustrated and feel cheated due to poor issuing bank responses to their problems. The best way for many to vent their frustration is to send their complaint to the letters to the editor section of local newspapers or to the Indonesian Consumers Foundation (YLKI), although such approaches often do not really help to solve their problem.

Credit card complaints received by YLKI, for example, mostly relate to the interest payments and annual fees and billing errors.

"Many cardholders filed their complaints to YLKI due to the lack of response from issuing banks," the foundation's legal advisor for banking Yusuf Shofie said.

Unlike many other countries, Indonesia has yet to issue a special law to protect credit card or debit card holders from unfair practices by the issuing banks.

The U.S., for example, has a law, the Fair Credit Card Act, to require credit card companies to disclose all their terms and charges in easily readable tabular form so that consumers will know the exact cost of using a particular card.

Transparency is needed because banks have different methods of, for example, calculating the cost of credit and the monthly balance. The monthly payment charged by credit card issuers differs according to the method they have used.

Although the passing of the Consumer Protection Law (UPK) in 1999 has brought much help in dealing with customers' complaints, it is not robust enough to cope with the financial disputes that arise between banks and their customers.

"Many issuing banks still ignore the law," Yusuf said.

The foundation received 99 bank-related complaints last year, 98 in 2000 and 140 in 1999. During the last six months, the foundation received 37 complaints from bank customers.

"The number is not significant. What matters most is the nature of the complaints," he said.

Most of them were credit card-related, such as the amount of interest that should be paid by customers, the annual fees, the blocking of credit cards without prior notice and discrepancies in the monthly balance.

"Many customers also complained about the way particular issuing banks dealt with the debt settlement," he said. Citing an example, he said that one consumer was surprised to receive a sudden visit by an individual claiming to be a representative of a particular bank.

The man forced the consumer to repay his debt, amounting to about Rp 2 million, of which he was not aware, because he had no longer used the credit card.

Many consumers also complained that many banks hired uncouth debt collectors to coerce credit card holders into repaying their debts. Others also complained they were the target of credit card fraud.

According to Yusuf, YLKI assisted bank customers by sending a letter to the issuing banks concerned, with a copy addressed to Bank Indonesia as the country's banking regulator.

"Complaints typically involve funds of less than Rp 5 billion, so it is ineffective to take such cases to court," Yusuf said, adding that some banks gave a quick response to complaints but others simply did not care.

"What concerned the foundation most is that many banks ignored the complaints. If such practices continue, we may consider pursuing a class action or other legal action against the issuing banks, he added.

Many banks have launched massive sales campaigns to attract new credit card members through various incentive and cash prize schemes.

The amount in interest, annual fees or other costs charged to cardholders is often misrepresented because some of the banks are not technologically ready to receive the influx of new members.