POSTSCRIPT / December 5, 2006 / Tuesday


Philippine STAR Columnist

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DTI tightens protection for credit-card shoppers

NO SURCHARGE: Good news for shoppers intending to use their credit cards but who are deterred by the widespread practice of merchants adding a surcharge to the tag or cash price when paid with plastic money.

The law says that the tag price of goods and services may not be padded or increased when the customer uses a credit card. To go around this, some retailers make it appear that the credit card price is actually the base price and then give those paying cash a purported discount.

The Department of Trade and Industry has warned that r etailers cannot use such artificial promotional discounts to circumvent its new directive issued last Nov. 5 prohibiting extra charges on goods and services paid with credit cards.

The stricter rule was explained by Director Victorio Mario Dimagiba of the DTI’s Bureau of Trade Regulation and Consumer Protection (BTRCP) in a letter to Catanduanes Rep. Joseph Santiago. The congressman shared the letter with media.

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VIOLATIONS: Using the (card) surcharge-inclusive price as regular tag, and then selling the same product “to cash purchasers at a lower price in the guise of a promotional discount,” violates DTI Administrative Order No. 10 series of 2006, Dimagiba told Santiago.

Dimagiba said: “Aside from the fact that this modus operandi is a circumvention of Article 81 of the Consumer Act, for which AO 10 was issued last Nov. 5, it is also a violation of Article 50 of the same law, which proscribes acts or practices of sellers that are deceptive.”

He added that under Article 50 (e), a practice is deceptive when it represents that a specific advantage of a consumer product exists when in fact it does not.

Violators would be held administratively and criminally liable under Sections 164 and 60 respectively, of the same law, he said. Penalty consists of imprisonment of up to six months, plus stiff punitive fines.

Santiago sought Dimagiba’s opinion after receiving complaints that after AO 10 was issued, some retailers resorted to using the (card) surcharge-inclusive price as base tag, then selling the same goods or services at an imaginary discount to those paying in cash.

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ANOTHER PLOY: AO 10 prohibits retailers from imposing any extra charge for goods or services paid with a credit card. It bans the use of two price tags — one indicating a “cash price” and another showing a “card price” — for the same item.

Section 5 of the order says: “All retailers who honor/accept credit/ATM/debit cards for payment shall not require the cardholders to pay a surcharge, extra charge or additional charge over and above the price tag on the consumer goods and services.”

I wonder how Dimagiba will handle this ploy used by Billini, an Italian restaurant in the Marikina shoe expo center in Cubao, where I ate pasta some days ago.

When I paid with my credit card, they added a 4-percent surcharge. I told the waiter that that was illegal and that they could go to jail for it.

A man with an Italian accent who I assumed was the owner/manager came over and explained that they add 4 percent because anyway they do not include the 12-percent VAT (value added tax) to the bill. I was supposed to be grateful for that thoughtful tax-evasion?

If he does not mend his ways, the owner may just get into trouble not only with the DTI but also with the Bureau of Internal Revenue and City Hall.

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COMPULSION: My comments critical of a bill ordering that all government agencies and state-run firms use only free/open source software (FOSS) in their information and communications operations elicited mixed reactions.

Judging from some of the email that I have received defending the FOSS bill sponsored by Rep. Teodoro Casino (Bayan Muna), it looks like my comments have been misunderstood — which is normal considering the complexity of the subject.

To clarify, my objection to the FOSS bill stems mainly from its compulsory nature. My position is that the use of free/open source software should be left to the discretion of the user and not mandated by law.

I am not ready to say that FOSS is technically inferior, or maybe superior, to other available software. Like other products, it must prove itself in the market without the Congress class legislating in its favor.

Under the bill, software is considered FOSS if it meets eight criteria. But for brevity, software is considered free/open if its source code is readily accessible, whose modification, redistribution and use with other software are not restricted, and if it is technology-neutral.

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OPEN MARKET: In short, to borrow a Maoist slogan, let a thousand flowers bloom.

It is bad policy to purposely legislate for or against marked products. Precisely we have been cracking our heads to ensure all and sundry, including foreign investors, that there is an even playing field here in the Philippines.

Now comes the Casino bill saying that all government agencies, as well as state-run corporations that do not even perform governmental functions, must discard their branded software and install instead only FOSS.

If eventually FOSS is able to convince more of us as being superior, then switching to it will come naturally in the interplay of market forces. For Congress to order a massive crossover to FOSS is disconcerting, to say the least.

There is already in the market an ample diversity of choices for software, with varying degrees of interoperability. The government, presuming to know better, cannot step in and tell users what is best for them.

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TIGHTER RULES: No wonder the Business Software Alliance, composed of at least 27 big names in the infotech world, is not sold on the FOSS bill. Among its critical comments:

“The FOSS Bill has several provisions that, taken together, would require the Philippines government to procure FOSS and open-standards-compliant software — even if such software were more expensive than competing non-FOSS alternatives.

“Section 6.2 states that the government ‘shall apply only FOSS or FOSS solutions… in all ICT projects and activities,’ while Section 6.1 says that the government shall only use ICT goods and services that support or are interoperable with open standards. Section 7 likewise mandates the use of open standards to prevent the government from becoming reliant on any particular vendor.

“Section 6.3 provides that the government may ignore these mandates only in ‘extraordinary circumstances,’ which it defines as circumstances ‘which may render the use of FOSS and open standards almost impossible for government use’ (emphasis added).”

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DISCRIMINATION: Even where such extraordinary circumstances exist, the BSA pointed out, Section 6.4.2 states that FOSS ‘will be selected and given preference when existing systems are to be retired or need major enhancements.’ It added:

“Section 12 makes these procurement mandates even more rigid. Within three years after the law takes effect, ‘85 percent of all existing government systems shall be open standards complaint and employ FOSS’ and ‘90 percent of government IT professionals, and 65 percent of the country’s IT professionals, must be proficient in the implementation of FOSS systems.’

“These provisions would discriminate against a broad segment of the ICT market and severely curtail the ability of the Philippines government to procure non-FOSS software from that market segment.”

BSA members include Adobe, Apple, Autodesk, Avid, Bentley Systems, Borland, Cadence Design Systems, CNC Software/Mastercam, Dell, Entrust, Hewlett Packard, IBM, Intel, Internet Security Systems, McAfee, Microsoft, PTC, RSA Security, SAP, SolidWorks, Sybase, Symantec, Synopsys, The MathWorks, and UGS.

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IPR DISTURBED: Another area of concern is the FOSS bill’s loosening up the protection of intellectual property rights.

The BSA said: “By limiting the government procurement to products licensed under FOSS terms, the bill would discriminate against developers who license their intellectual property rights on non-FOSS terms. This would dissuade firms from licensing their IPR-protected innovations in a manner that maximizes their commercial value.

“The result would be to create a disincentive to innovation in the Philippines by reducing the potential returns that companies can hope to achieve on their research and development investments.

“Rather than adopt such an anti-innovation policy, the government should maintain its current pro-innovation approach of allowing both commercial and FOSS developers to license their products as they see fit.

“Providing such flexibility will ensure that software developers continue to have maximum incentives to develop and market their innovations.”

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(First published in the Philippine STAR of December 5, 2006)

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