The Urgency and Necessity Decree 70/23 (the “Decree”) published on December 21, 2023, in the Official Gazette introduces a series of significant modifications to Law 25,065 (the “Credit Card Law”).
According to the Decree, the modifications respond to the need for a substantial reduction in regulations and simplification in the credit card sector, adapting it to new methods of interaction and technological advances in digitization. In pursuit of this goal, the Decree establishes the repeal of sections related to (i) user identification (Section 5); (ii) the drafting of the credit card issuance contract (Section 7); (iii) the perfection of the contractual relationship (Sections 8 and 9); (iv) sanctions against entities failing to comply with the obligation to inform or, as the case may be, not complying with the provisions regarding the level of rates to be applied in accordance with the provisions of the Central Bank’s Organic Charter (Section 17); (v) the obligation to provide information from the issuers to the provider (Sections 32 and 35); (vi) the prohibition of reporting to personal financial background databases about the holders and beneficiaries of Credit Card extensions or options when the holder has not met their obligations, is in default, or in the refinancing stage (Section 53); and (vii) the repeal of the obligation of issuing entities to send monthly information about their offers to the Secretariat of Industry, Commerce, and Mining (Section 54).
Additionally, the Decree establishes modifications to certain sections of the Credit Card Law, detailed below:
(i) credit card systems will no longer be considered a complex and systematized set of individual contracts; instead, it will be understood, following this modification, to function simply as a set of individual contracts;
(ii) it stipulates that the credit card issuer can be an entity of any nature, with it being sufficient that the issuance of credit cards is provided for in its corporate purpose;
(iii) it incorporates the possibility for the credit card to be physical or virtual, in addition to magnetic or any other type of technology;
(iv) it eliminates the possibility of establishing differentiated tariffs for commissions or other charges, as well as the possibility of applying discounts and/or charges on supplier settlements through the use of credit and/or debit cards; specifying that the issuing entity must disclose the financing rate applied to the credit card system;
(v) it establishes the possibility of submitting, preferably electronically, the monthly summary of operations conducted with a credit card. Additionally, it removes the obligation for the aforementioned account summary to be available to the holder at the issuing branch of the card;
(vi) it removes the requirement for the contract between the issuer and the provider to be previously approved by the regulatory authority; (vii) concerning nullity clauses, it eliminates the nullity of clauses imposing a fixed amount for delays in payment of the card statement and those additional clauses not authorized by the regulatory authority; and
(viii) it removes the limits imposed on punitive interests that credit card issuers can apply to cardholders. Instead, it specifies that punitive interests will not be compoundable, meaning that punitive interests cannot be added to the principal debt.
COMMENT:
These new provisions primarily allow the issuance of credit cards by any entity, deregulating the restrictions in a market where only financial, commercial, or banking entities could issue credit cards.
While these modifications, among others, eliminate the requirement of prior approval of the contract between the issuer and the supplier by the regulatory authority and the obligation to have copies of card statements at branches, as of the current date, consumer protection regulations remain in force. These regulations are of public order, such as Section 4 of Law 24240, which establishes that information must be provided in physical form unless the consumer expressly chooses to use any other alternative means of communication.
EFFECTIVENESS:
In relation to the modifications to the regime applicable to credit cards, the DNU does not contain a provision declaring its effective date. Therefore, given its publication date, its provisions should be understood to take effect from the eighth day following publication, i.e., on December 29, 2023, in accordance with the general rules on the entry into force of regulations contained in Section 5 of the Civil and Commercial Code of the Nation.
In the event of rejection by resolution of both houses of the National Congress, these modifications will be repealed, “preserving acquired rights during their validity,” according to Section 24 of Law No. 26.122.