Volume 6, Number 17, Page 1

Summary of Argentine Credit Card Law

By Alexis Kook-Weskott

On January 9, 1999 Credit Card Law No. 25,065 (hereinafter the “Law”) was enacted, establishing certain rules concerning the “System of Credit, Purchase and Debit Cards” (hereinafter the “System”) to be applied to all Issuer-Holder and Issuer-Supplier (as defined in Articles 2 and 4 of the Law) relations. Furthermore, the relations governed by the System are to be subject to the Law and other supplementary rules such as the Civil and Commercial Codes, and the Consumer Defense Law No. 24.240.

By way of Decree No. 15/99, the Executive Branch promulgated the Law and on the basis of deregulation and freedom of commerce concerns, vetoed certain regulatory aspects of the Law related to percentages of fees, interest calculations, applicable interest rates, jurisdiction and management of database information by the Issuer.

In Articles 2 and 4, the Law briefly establishes the following definitions: (i) “Issuer” is the financial or commercial entity that issues a credit card or performs the corresponding payment; (ii) “Holder” is the person responsible for all the charges and expenses incurred by the holder or by any other authorized person or additional holder; (iii) “Supplier” is the party that undertakes to provide goods services and receives the corresponding payment from the Issuer through the System; and (iv) “Credit Card” is the Holder-identifying instrument (magnetic or of any other technology) issued by the Issuer pursuant to a previous contractual relation between the Holder and the Issuer.

Likewise, the System is described as a complex and systematic bundle of individual agreements with several specific purposes. The core of these agreements include the following rights: (i) to permit the Holder to purchase and/or rent goods or services, and to obtain loans or cash in advance; (ii) to finance the Holder, as responsible for the payments, according to certain guidelines previously established in the agreement; and (iii) to pay the Supplier, under agreed terms, for the goods or services consumed by the Holder.

According to Article 5 of the Law, the Credit Card shall contain the Holder’s name and surname, the internal registration number, Holder’s signature, date of issuance, expiration date, safety measures to avoid counterfeit, and Issuer/financial entity identification. On the other hand, the Credit Card issuance agreement (hereinafter the “Issuance Agreement”) must at least include the following: (i) term of validity; (ii) Holder payment dates; (iii) percentages of minimal amounts to be paid by the Holder; (iv) authorized maximum monthly purchase and cash advance amounts; (v) compensatory, financial and default interest rates; (vi) monthly account closing date; (vii) type and amount of administrative charges clearly and separately itemized; (viii) procedures and responsibilities in case of loss or theft; (ix) fixed and variable fees; and (x) suspension or cancellation causes.

However, the Issuance Agreement is not considered enforceable until it has been executed, the corresponding Credit Card has been issued and the Holder has received and accepted the Credit Card in agreement with the terms of the Issuance Agreement. The automatic extension or renewal of the Issuance Agreement is optional to each party and cancellation may be made with prior written notice and can be partial with respect to any additional Holder or authorized person.

Article 14 of the Law provides that the Issuance Agreement may not: (i) have the Holder waive any of the rights granted by the Law; (ii) permit the Issuer to modify unilaterally the terms of the Issuance Agreement; (iii) impose a fixed amount for delays related to payment obligations; (iv) impose a mandatory Holder’s representative; (v) pursue tacit agreements of the Holder to other services offered by the System; or (vi) impose charges on the Holder for providing information concerning the cancellation of the Credit Card caused by theft, loss or any other cancellation.

The Law establishes in Article 23 a number of rules to be followed by the Issuer with respect to the invoice statement addressed to the Holder. In short, the Issuer shall deliver, on a monthly basis, a detailed summary of the transactions performed by the Holder and any additional Holder, including: (i) identification of the Issuer, Supplier, Holder and any additional Holders; (ii) detailing the current, previous and next closing date and payment date; (iii) date and amount of each operation; (iv) identification number of each voucher; (v) state purchase and credit limits; (vi) compensatory and default interest rate and dates from which they are applicable; (vii) minimum payment including default interest rate; (viii) amounts owed for current and previous periods; and (ix) deadline for making claims for improper charges on the invoice statement.

Moreover, the invoice statement shall be delivered by the Issuer to the Holder to the domicile indicated by the Holder in the Issuance Agreement or such other address specified by the addressee. The monthly statement shall be delivered to the Holder and the Holder shall receive such invoice statement at least 5 days prior to the payment date. In case the Issuer fails to perform its obligations, the Holder shall have available a twenty-four hour telephone number provided by the Issuer in order to inform the Holder the account balance and minimum payment due. In any case, a copy of the invoice statement shall be available to the Holder in the branch of the Issuer which opened the account

The Law also provides in Articles 26, 27 and 28 an invoice statement claim procedure. Mainly, it establishes that: (i) the Holder may contest, in writing, the invoice statement within thirty days from receipt, clearly stating any mistake contained therein and enclosing all relevant documentation; (ii) the Issuer shall acknowledge receipt within 7 days from reception and shall correct such mistake within the following fifteen days (such period of time will be increased up to sixty days if the charge against which a claim is made was made outside of Argentina); (iii) during this procedure the Issuer shall not interfere with the normal use by the Holder of the Credit Card; and (iv) a minimum payment made by the Holder shall not mean the Holder’s acceptance of the invoice statement.

With respect to all Issuer-Supplier relations, the Law establishes in Articles 32 to 37 certain specific rules to be included in the agreement between the parties (hereinafter the “Supplier Agreement’) and some undertakings to be performed by both parties. Specifically, the Law states that the Issuer shall provide the Supplier: (i) identification materials and informative publications related to the Holders of the System; (ii) information concerning the loss and theft of Credit Cards; and (iii) information related to the cancellation of Credit Cards, without taking into consideration the reason for such cancellation. The Issuer’s failure to supply such information shall not be construed to the detriment of the Supplier’s rights, and any infringement of the rules in force will not be borne by the Supplier if the Issuer has received the corresponding payment from the Holder. On the other hand, the Supplier shall always verify the identity of the Credit Card Holder and request the Issuer’ s authorization for all transactions.

Article 38 of the Law provides that the Supplier Agreement shall contain as a minimum requirement: (i) term of validity; (ii) maximum amount for transactions; (iii) determination of type and amount of fees, interest rates and administrative charges; (iv) obligations imposed by the Law; and (v) type of receipts to be filed concerning the transactions carried out by the Holder.

Delinquency in a Holder’s Credit Card debt balances, maintained in current accounts opened for the exclusive purpose of being the Holder’ s Credit Card account, cannot be brought to courts directly through fast track proceedings without first having exhausted remedies in proceedings called “preparation de la via executive” established in Articles 39 and 41 of the Law. The statute of limitations for fast track proceedings as provided by the Law is one year, and for ordinary proceedings is three years.

The authorities in charge of the application of the Law are the Argentine Central Bank, regarding financial issues and the Secretary of Industry, Commerce and Mining (hereinafter the “SIC”) in commercial matters. Such authorities are empowered to apply sanctions depending on the seriousness of the action of the party in question. According to Article 48, they may: (i) apply fines for up to twenty times the amount of the transaction involved; and (ii) decide to cancel an authorization to operate. Such cancellation shall not impede the Holder’s right to initiate separate civil or criminal claims to obtain either applicable damages or criminal sanctions.

Finally, the Law establishes in Articles 54 and 55 that the Issuer shall deliver to the SIC detailed information on a monthly basis concerning the services offered which will be published in press media with ample circulation. In cases where the services offered are promotional packages with different financial and banking services, including the issuance of a Credit Card, the total monthly cost to be paid by the Holder shall be specifically described.

Through Decree No. 15/99 issued on January 9, 1999, the Executive Power promulgated the Law and on the basis of deregulation and freedom of commerce vetoed certain regulatory aspects of the Law related to percentages of fees, interest calculation and limited rates, jurisdiction and handling by the Issuer of database information.

Alexis Kook-Weskott is an attorney with Baker & McKenzie in Buenos Aires. This article is included with the kind permission of the law offices of Baker & McKenzie.