Guatemala: Credit Card Law

Published on Feb 27, 2024

Our lawyers in Guatemala, experts in litigation and dispute resolution, share with us this article that addresses the main aspects of dispute resolution brought by the Law of Credit Cards.

This law, as can be seen from its own explanatory statement contained in the initiative 5544, aims to update Guatemalan legislation dating back to 1970, providing an adequate legal framework that regulates everything related to credit cards in national practice, as a fundamental instrument in commercial and credit operations; particularly, as an instrument that allows its holder to dispose of goods or services without the immediate delivery of cash and whose simple presentation allows payment obligations to be deferred in certain transactions. This due to its constant use in commerce, mass contracting and the need to establish and promote a culture of protection the rights and obligations of the issuer, affiliate, and cardholder in Guatemala.

Through six chapters and 66 articles, the law regulates credit card operations in Guatemala, the relationships between issuer, affiliate and cardholder, protection mechanisms for credit card users and a special sanctioning regime.

The procedural aspects that are of utmost relevance within the law are the following:

First, it regulates that the credits originated using credit cards will be subject to the rules of promissory notes, as debt securities. Therefore, the exchange rules and principles contained in the Guatemalan Commercial Code, will be applicable to these credits.

Second, it regulates cardholder's payment agreement, establishing that it must be formalized through a legal document at no cost; document which, by the mere fact of its issuance, is granted the character and nature of an enforceable title, which voids the contract that originated the cardholder's debt. Therefore, any breach of the payment agreement may be executed through a more expeditious process, with limited defenses and without the need for the plaintiff to be required to provide a guarantee for the injunctions requested.

Third, a prohibition for offsetting credit card obligations was established. Credit card issuers and administrators are prohibited from offseting credit card obligations with the cardholder's monetary or savings funds without the cardholder's express authorization or court order.

Fourth, the law also proposes a regime for the supervision and protection of cardholders, their own infractions, as well as the creation of certain crimes and sanctions.

The supervision and protection regime will be exercised by the Superintendencia de Bancos -SIB- as the entity in charge of monitoring and inspecting the credit card issuing entities established in the country. On the other hand, the disciplinary regime contemplates the imposition of sanctions, depending on the severity, through the Dirección de Atención al Consumidor y Usuario -DIACO-, as long as a prior negotiation was concluded.

Also, through the law, 4 new criminal types related to credit cards are created, that are:

i) credit card cloning;
ii) use of illegal credit or debit card;
iii) distribution and marketing of Illegal credit or debit cards;
iv) fraudulent use of a credit or debit card.

It is necessary to mention that the law proposes aggravating circumstances for the crimes, increasing the penalties by two thirds, basically when the perpetrator of the crime is a trusted person of the issuer, operator, or affiliate.

Fifth and last, the law addresses harassment, with the purpose of avoiding possible abuses by creditors or collection agents, regulating the number and time of communications, as well as avoiding harassment practices or practices that are intended to cause embarrassment in the debtor so that payments are made.

This is not the first time that the Congress of the Republic of Guatemala tries to regulate and update the legislation regarding credit cards. In 2015 a “Credit Card Law” was approved; however, the constitutionality of the norm was questioned: first, due to defects in the legislative process, and second, for not granting a hearing to entities related to the country's credit system. This complaint of unconstitutionality was accepted, under the consideration that this law affected the functions of the Junta Monetaria -JM- and the Superintendencia de Bancos -SIB-.

Currently, we are waiting for the Credit Card Law to be published.

Juan Alberto Ayerdi - Associate, Guatemala.

The information provided by ARIAS® is presented for informational purposes only. This information is not legal advice and is not intended to create, and does not constitute, an attorney-client relationship. Readers should not act upon this information without seeking advice from professional advisers.