The Department of Trade and Industry (DTI) has issued a ban on “installment only” payments as the only payment option available for consumers. Effective last April 23, the Department of Trade and Industry (DTI) has issued the Administrative Order (DAO) No. 21-03 also known as the Guidelines for Payment Options on the Purchase of Consumer Products and Services.

The Department Administrative Order (DAO) mandates “all persons and companies, whether registered or unregistered, engaged in the sale or offer for sale of consumer products and services, to provide consumers the option to pay in cash, in installment, or a combination of the two, whenever they make a purchase. An “installment only” mode of payment is strictly prohibited.”

The Department Administrative Order (DAO) is all-encompassing. Meaning, it applies to all kind of sales, be it products or services, though it’s more prevalent in the motorcycle and automotive industry. It is now clearer than ever, an “installment only” mode of payment is strictly prohibited by law.

Apparently, the “installment only” payment basis is very common in the automotive and motorcycle industry. DTI has received a shocking 3,060 complaints from consumers that shops, especially motorcycle dealerships, insist that the buyers pay in monthly installments even if they are willing to pay the whole amount in cash. DTI finds it unfair and unconscionable hence they prohibited this rampant abuse of consumers.

Furthermore, for consumers who choose to pay in installments, no interest shall be due unless expressly stipulated in writing and the interest should not exceed the market-oriented rate. This is distinctly provided in the DAO as well.

“The DTI highlights the consumers’ right to choose not only on products and services that she/he needs but also the mode of payment for these goods or services. The DTI reminds all sellers to comply with DAO No. 21-03 to avoid being penalized,” DTI Consumer Protection Group (CPG) Undersecretary Atty. Ruth B. Castelo stated. 

The violation of the DTI Ban on installment only payment option may result in imprisonment for a period of five months to one year or a fine ranging from P500 to P10,000 (or both upon the discretion of the court).