Saturday, July 09, 2011

BSP Circular No. 702, Series of 2010 on protection of credit card holders (Plain English / Plain Language revisions)

US laws with subjective and objective criteria for readability:

[1] Paragraph (5) of the Readable language in insurance policies (Florida Stat. Ann. § 627.4145) on how the Flesch reading ease test score is calculated manually.
[2] Connecticut Plain Language Law (Conn. Gen. Stat. § 42-152, promulgated in 1980): alternative subjective and objective tests for readability.[3] Pennsylvania Plain Language Consumer Contract Act (Pa. Stat. Ann. tit. 73, § 2201, promulgated in 1993): language and visual guidelines for readability.
Notes: (1) Please read my post “Plain English, Plain Language or Plain Writing for government offices and private companies in the Philippines.” (2) I conduct seminars for government offices or private companies that want to train their staff in Plain English. Please email me at gtgalacio@yahoo.com or text 0927-798-3138 for details. (3) For interactive grammar exercises, please visit my “Better English for everyone” website; I also have interactive quizzes on Plain English / Plain Language. (4) If the tables do not look right, try using Mozilla Firefox or Google Chrome. (5) These revisions are my own and are used only to illustrate Plain English principles. If there are conflicts between my revisions and the official BSP circular, you must follow the circular.

BeforeAfter
Subject: AMENDED REGULATIONS TO ENHANCE CONSUMER PROTECTION IN THE CREDIT CARD OPERATIONS OF BANKS AND THEIR SUBSIDIARY OR AFFILIATE CREDIT CARD COMPANIESSubject: Amended Regulations to Enhance Consumer Protection in the Credit Card Operations of Banks and their Subsidiary or Affiliate Credit Card Companies

Plain English / Plain Language revisions:

The circular wanted to emphasize the subject matter’s importance by using all caps. But, as Bryan Garner, editor in chief of Black’s Law Dictionary, points out, “the effect of using all caps is to make the text harder to read and understand.” (Michigan Bar Journal, March 2010). Garner suggests using boldface or putting the text in a box.

Using all caps also leads to typographical errors since the spell check tool of some word processing programs doesn’t work with text in all caps.

Most people think that formatting in all caps makes a text conspicuous. But the US 9th Circuit Court of Appeals in its 2002 ruling in Darlene M. Bassett vs. American General Finance, Inc. (285 F.3d 882) debunked this claim about conspicuousness and the use of all caps:
[1] The BAP was troubled that the right-to-rescind statement is in lower case, but there is nothing magical about capitals. True, the UCC specifies that “[a] printed heading in capitals” is normally conspicuous. U.C.C. § 1 201(10) (emphasis added). This has given rise to the canard that all language in capitals is automatically conspicuous, and the fallacy that language not in capitals isn't conspicuous.

[2] The use of capitals as a talisman of conspicuousness has survived intact despite decades of improved literacy and technology. Even some web page “click-through” agreements have clauses written in capitals, though there are better ways of making text stand out in a web browser window. (Specht v. Netscape Communications Corp)

[3] Lawyers who think their caps lock keys are instant “make conspicuous” buttons are deluded. In determining whether a term is conspicuous, we look at more than formatting. A term that appears in capitals can still be inconspicuous if it is hidden on the back of a contract in small type. (Sierra Diesel, 890 F.2d at 114)

[4] Terms that are in capitals but also appear in hard-to-read type may flunk the conspicuousness test. (Lupa v. Jock’s)

[5] A sentence in capitals, buried deep within a long paragraph in capitals will probably not be deemed conspicuous. Formatting does matter, but conspicuousness ultimately turns on the likelihood that a reasonable person would actually see a term in an agreement. Thus, it is entirely possible for text to be conspicuous without being in capitals.
Plain English / Plain Language revisions:

“Pursuant to” is legalese; it’s better to use “under” or “in accordance with” according to “Plain English Lexicon” by Martin Cutts.

I deleted “hereby.” Cutts says about this word: “Liked by lawyers for its claimed ‘performative’ role in phrases like ‘I hereby declare...,’ but many legal documents manage without it.”

BeforeAfter
Pursuant to Monetary Board Resolution No. 1728 dated 02 December 2010, the provisions of the Manual of Regulations for Banks (MORB) and the Manual of Regulations for Non-Bank Financial Institutions (MORNBFI) are hereby amended, as follows:Under Monetary Board Resolution No. 1728 dated 02 December 2010, the provisions of the Manual of Regulations for Banks (MORB) and the Manual of Regulations for Non-Bank Financial Institutions (MORNBFI) are amended, as follows:

Plain English / Plain Language revisions:

I deleted “hereby” and “thereof.” Plain English equivalent of “thereof” is “of it” (“Plain English Lexicon” by Cutts).

In Version 1, I retained the modifying phrase “on the requirement for banks/quasi-banks with credit card operations, to have written policies, procedures and internal control guidelines” but in Version 2, I removed it completely.

BeforeAfter
Section 1. The second paragraph of Subsection X320.2 of the MORB, and Subsections 4320Q.2 (2008-4337Q.2) and 4301N.2 of the MORNBFI on the requirement for banks/quasi-banks with credit card operations, to have written policies, procedures and internal control guidelines is hereby amended so as to delete Item “d” thereof.Version 1

Section 1. The second paragraph of Subsection X320.2 of the MORB, and Subsections 4320Q.2 (2008-4337Q.2) and 4301N.2 of the MORNBFI on the requirement for banks/quasi-banks with credit card operations, to have written policies, procedures and internal control guidelines is amended so as to delete Item “d”.

Version 2

Section 1. Item “d” of the second paragraph of Subsection X320.2 of the MORB, and Subsections 4320Q.2 (2008-4337Q.2) and 4301N.2 of the MORNBFI is deleted.

Plain English / Plain Language revisions:

For obligations, “shall” should be replaced by “must.” Garner says: “The meaning of ‘shall’ changes from sentence to sentence. Courts have held that ‘shall’ can mean has a duty to, should, is, will, or may.”

BeforeAfter
Banks/quasi-banks and their subsidiary or affiliate credit card companies shall not issue pre-approved credit cards.Banks/quasi-banks and their subsidiary or affiliate credit card companies must not issue pre-approved credit cards.

Plain English / Plain Language revisions:

Garner on Language and Writing, copyright American Bar AssociationSince the early 1900s, various courts in the US, UK, and Australia have severely criticized the use of “and/or.” The Australian Supreme Court in a March 2010 case called “and/or” as “an embarrassing expression which endangers accuracy”. A UK court called “and/or” as a “bastard conjunction.”

Garner explains in his book on book on language and writing:
“The real problem with “and/or” is that it plays into the hands of a bad faith-reader. Which one is favorable? And or Or? The bad faith-reader can pick one or the other, or both -- whatever reading is better from that reader’s perspective.”
I replaced “ascertaining” with the simpler phrase “finding out.”

Instead of “in accordance with,” I used “in line with” (Plain Language Lexicon by Cutts).

I replaced the phrase “are financially capable of fulfilling their credit requirements” with “can fulfill their credit requirements.”

In After (Version 2), I removed the cross-reference (“in line with the provisions of Subsection X304.1/4304Q.1 (2008-4312Q.1)/4312N.1”). Prof. Joseph Kimble, editor in chief of The Scribes Journal of Legal Writing, founding director of the Center for Plain Language, and winner of two Burton Awards for Legal Achievement, explains in the Michigan Bar Journal (October 2007):
“Most readers will tell you, if you care to ask, that unnecessary cross-references are at least distracting and at worst irritating. They distract by cluttering the sentence and directing the reader’s attention elsewhere. And they irritate when the reader realizes that the reference was to something already known or entirely obvious.”
In After (Version 3), I changed the phrase “banks/quasi-banks or their subsidiary or affiliate credit card companies” since the two “or” may confuse readers. I used instead the phrase “banks/quasi-banks or their card companies (subsidiary or affiliate).”

BeforeAfter
Before issuing credit cards, banks/quasi-banks and/or their subsidiary/affiliate credit card companies must exercise, in accordance with the provisions of Subsection X304.1/4304Q.1 (2008-4312Q.1)/4312N.1, proper diligence by ascertaining that applicants possess good credit standing and are financially capable of fulfilling their credit requirements.






Version 1

Before issuing credit cards, banks/quasi-banks or their subsidiary or affiliate credit card companies must exercise, in line with the provisions of Subsection X304.1/4304Q.1 (2008-4312Q.1)/4312N.1, proper diligence by finding out if applicants possess good credit standing and can fulfill their credit requirements.

Version 2

Before issuing credit cards, banks/quasi-banks or their subsidiary or affiliate credit card companies must exercise proper diligence by finding out if applicants possess good credit standing and can fulfill their credit requirements.

Version 3

Before issuing credit cards, banks/quasi-banks or their card companies (subsidiary or affiliate) must exercise proper diligence by finding out if applicants possess good credit standing and can fulfill their credit requirements.

Plain English / Plain Language revisions:

Book by Judge Mark PainterThe original paragraph has two sentences, with the first sentence having 89 words. Plain language experts and resources recommend an average sentence length of 25 words or less. (Garner, Kimble, Cutts, “30 Suggestions to Improve Readability or How to Write for Judges, not like Judges” by Judge Mark Painter, “How to Write Clearly” from the European Commission, and “Plain English Good Practice Guide” from the Government of South Australia)

I broke down the long paragraph by rewriting it, placing the enumeration at the end, not at the beginning, of the sentence (“Guidelines for Drafting and Editing Court Rules” by Garner).

I also used a vertical list. Prof. Kimble says in his article “Lessons in Drafting from the New Federal Rules of Civil Procedure” (Michigan Bar Journal, August 2007):
“The vertical list is one of the drafter’s—and reader’s—best friends. Probably no other technique is more useful for organizing complex information, breaking it down into manageable chunks, avoiding repetition, and preventing ambiguity.”
The phrase “such as, but not limited to” is legalese and can be changed to “such as” without any negative legal effect.

In the phrase shall be “determined and used as basis for setting credit limits”, I changed the doublet “determined and used” into just one word “used.”

The phrase “net take home pay of applicants who are employed” seems to be synonymous with “gross monthly income less deductions for income taxes, premium contributions, loan amortizations, and other deductions.” Is there any other way of computing the net take home pay except by considering these deductions?

BeforeAfter
The net take home pay of applicants who are employed, the net monthly receipts of those engaged in trade or business, or the net worth or cash flow inferred from deposits of those who are neither employed not engaged in trade or business or the credit behavior exhibited by the applicant from his other existing credit cards, or other lifestyle indicators such as, but not limited to, club memberships, ownership and location or residence and motor vehicle ownership shall be determined and used as basis for setting credit limits. The gross monthly income may also be used provided reasonable deductions are estimated for income taxes, premium contributions, loan amortizations and other deductions.The following must be used as basis for setting credit limits:
  1. net take home pay of applicants who are employed;
  2. net monthly receipts of those engaged in trade or business;
  3. net worth or cash flow inferred from deposits of those who are neither employed nor engaged in trade or business;
  4. credit behavior exhibited by the applicants from their other existing credit cards; or
  5. other lifestyle indicators such as:
  1. club memberships;
  2. ownership and location of residence;
  3. motor vehicle ownership.

Plain English / Plain Language revisions:

The phrase “All credit card applications, specifically those solicited by third party representatives/agents” seems to use the word “specifically” wrongly. Could it be a typographical error with “specially” as the intended word? The word “all” negates “specifically.” If ALL credit card applications (whether solicited by the banks/quasi-banks, their subsidiaries or affiliates, or third party representatives/agents) must go through a strict assessment process, then there is no need for the qualifying phrase “specifically those solicited by third party representatives/agents.”

As I discussed above, when referring to obligations, you should use “must” instead of “shall.”

The phrase “representatives/agents” is redundant; either “representatives” or “agents” can be used alone.

“Thereon” is legalese; Cutts suggests the plain English alternative “on it.” I divided the paragraph into two sentences and instead of “thereon,” I used “the information stated on the application.”

In the phrase “validated and verified,” is there a legal or practical difference between the two words? If something has been validated, should it still be verified? I don’t think there’s a real difference between these words; the phrase is redundant, and either word can be used alone.

BeforeAfter
All credit card applications, specifically those solicited by third party representatives/agents, shall undergo a strict credit risk assessment process and the information stated thereon validated and verified by authorized personnel of the banks/quasi-banks and their subsidiary or affiliate credit card companies, other than those handling marketing.All credit card applications must undergo a strict credit risk assessment process. The information stated on the application must be verified by authorized personnel, other than those handling marketing, of the banks/quasi-banks and their subsidiary or affiliate credit card companies.

Plain English / Plain Language revisions:

The amendment in Section 3 of the circular (excluding the paragraph “Transitory provisions”) is a very long paragraph with 235 words; what make it more complicated are the two provisos.

The sub-paragraph beginning with “A table …” has 112 words, with no period and ending with a semicolon after the phrase “application form and billing statement” in the proviso. I divided this long sub-paragraph into three sub-paragraphs, with sub-paragraph 1.2 as my revision of the proviso.

In the phrase “billing cycle/period,” is there really a legal or practical difference between cycle and period? Either word can be used alone.

In the phrase “payment of only the minimum amount due,” the word “payment” is a nominalization (“30 Suggestions to Improve Readability or How to Write for Judges, not like Judges” by Judge Painter, “How to Write Clearly” from the European Commission, and “Plain English Good Practice Guide” from the Government of South Australia). I edited the phrase to read “paying only the minimum amount due.”

I discussed above the reasons against using “and/or.” In paragraph 2 of Section 3, “interest and/or other charges” should be reworded as “interest or other charges, or both” (Scott P. Stolley, Michigan Bar Journal, August 2003).

Kimble down with provided thatKimble in his article “Down with Provided That” (Michigan Bar Journal, July 2004) enumerates the criticisms made by legal drafting experts against provisos. Among others, Kimble cites:
[1] G.C. Thornton, Legislative Drafting 80, 81 (4th ed. 1996): ‘‘On both historical and grammatical grounds the proviso stands condemned. . . . The case against the proviso is established beyond reasonable doubt by the ambiguity and uncertainty of the phrase.’’

[2] Thomas R. Haggard, Legal Drafting in a Nutshell 279 (2d ed. 2003): ‘‘[P]rovided that . . . defies grammatical analysis. Provisos produce single sentences that are often hundreds of words long. Knowledgeable drafters have railed against them for years. Apart from being a grammatical abomination, provided that is ambiguous . . . .’’

[3] David Mellinkoff, Mellinkoff ’s Dictionary of American Legal Usage 520 (1992): ‘‘[The proviso] is one of the horrors of legal writing, in a class with notwithstanding.’’
BeforeAfter
Banks/quasi-banks and their subsidiary or affiliate credit card companies shall also provide the following information to their cardholders:
  1. A table of the applicable fees, penalties and interest rates on credit card transactions, including the period covered by and the manner of and reason for the imposition of such penalties, fees and interest; fees and applicable conversion reference rates for third currency transactions, in plain sight and language, on materials for marketing credit cards, such as brochures, flyers, primers and advertising materials, on credit card application forms, and on credit card billing statements: Provided, That these disclosures are in addition to the full disclosure of the fees, charges and interest rates in the terms and conditions of the credit card agreement found elsewhere on the application form and billing statement; and
  2. A reminder to the card holder in the monthly billing statement, or its equivalent document, that payment of only the minimum amount due or any amount less than the total amount due for the billing cycle/period, would mean the imposition of interest and/or other charges;
Provided, That such table of fees, penalties and interest rates and reminder shall be printed in plain language and in bold black letters against a light or white background, and using the minimum Arial 12 theme font and size, or its equivalent in readability, and on the first page, if the applicable document has more than one page.
Banks/quasi-banks and their subsidiary or affiliate credit card companies must also provide the following information to their cardholders:
  1. A table of (a) the applicable fees, penalties and interest rates on credit card transactions, including the period covered by and the manner of and reason for the imposition of such penalties, fees and interest, and (b) fees and applicable conversion reference rates for third currency transactions; and
  2. A reminder to the card holder in the monthly billing statement, or its equivalent document, that paying only the minimum amount due or any amount less than the total amount due for the billing period, would mean the imposition of interest or other charges, or both.
These disclosures are in addition to the full disclosure of the fees, charges and interest rates in the terms and conditions of the credit card agreement found elsewhere on the application form and billing statement.

The table of fees, penalties and interest rates, and reminder must be printed:
  1. on materials and documents for marketing credit cards such as brochures, flyers, primers and advertising materials, credit card application forms and billing statements; and
  2. in plain language and in bold black letters against a light or white background, and using the minimum Arial 12 theme font and size, or its equivalent in readability, and on the first page, if the document has more than one page.

Plain English / Plain Language revisions:

In the phrase “collection agency/agent,” is there a legal or practical difference between agency and agent? Could “agency” mean an SEC-registered corporation and “agent” mean an individual? Either word can be used alone. Besides, the circular is not consistent since the next sentence uses the phrase “collection agency,” not “collection agency/agent.”

Foe brevity, I changed the phrase “required notification in writing” into “written notification.” From the context, it’s clear that the notice is “required.”

“Prior to” is legalese and the plain English equivalent “before should be used. Kimble says in A Modest Wish List for Legal Writing (79 Mich. B.J. 1574, 1577, 2000):
Prior to takes the booby prize for the most common inflated phrase in legal and official writing. Why would anyone prefer it to before? Try to think of a single literary title or line that uses prior to . . . . By itself, prior to may seem insignificant. But it often leads to clumsy, indirect constructions . . . . More important, a fondness for prior to may indicate a fondness for jargon—and a blind resistance to using plain words. That resistance, that cast of mind, is in large part responsible for the state of legal writing.”
The part reading “of the endorsement of the collection of their account” uses the preposition “of” three times and may cause confusion. Kimble says: “Root out unnecessary prepositional phrases. Question every of. There’s no surer way to tighten legal writing than to eliminate unnecessary prepositional phrases. And as simple as it may sound, there’s no better indicator than the word of.” (Lessons in Drafting from the New Federal Rules of Civil Procedure, Part 4, from Michigan Bar Journal, November 2007) Kimble suggest three ways of eliminating an “of phrase”: using possessives, converting into adjectives, and converting into an –ing form.

Take note that in this section, the phrase “banks/quasi-banks and their subsidiary/affiliate credit card companies” is used. In other instances, the circular uses the phrase “banks/quasi-banks and their subsidiary or affiliate credit card companies.” The difference is that in the first phrase, the conjunction “and” is used. In the other instances, “or” is used. Does the circular mean that BOTH the banks/quasi banks and their subsidiary or affiliate credit card companies must send the notice to the card holder?

Grammatical error in the circular: “personnel” is plural and so “their” should be used instead of “his/her.”

BeforeAfter
Banks/quasi-banks and their subsidiary/affiliate credit card companies shall inform their cardholders in writing of the endorsement of the collection of their account to a collection agency/agent, or the endorsement of their account from one collection agency/agent to another, at least seven (7) days prior to the actual endorsement. The notification shall include the full name of the collection agency and its contact details: Provided, That the required notification in writing shall be included in the terms and conditions of the credit card agreement. Banks/quasi-banks and their subsidiary/affiliate credit card companies shall adopt policies and procedures to ensure that personnel handling the collection of accounts, whether these are in-house collectors, or third-party collection agents, shall disclose his/her full name/true identity to the cardholder.Banks/quasi-banks and their subsidiary/affiliate credit card companies must inform their cardholders in writing that they are endorsing the collection (1) to an agency, or (2) from one collection agency to another, at least seven days before the actual endorsement. The notification must include the full name of the collection agency and its contact details.

The written notice must be included in the terms and conditions of the credit card agreement.

Banks/quasi-banks and their subsidiary/affiliate credit card companies must adopt policies and procedures to ensure that collection personnel, whether in-house or third-party, disclose their full name or true identity to the cardholder.

Plain English / Plain Language revisions:

The phrase “depending on their severity” is a misplaced modifier; it also creates a legal problem. Does “depending on their severity” refer to the sanctions or to the violations? If the phrase refers to the violations (which is what I think the circular means), then the sentence should be edited to read “Depending on their severity, violations shall be subject to any or all of the following sanctions.” In my revision, I also replaced “shall be” to “are.”

BeforeAfter
Section 6.Violations shall be subject to any or all of the following sanctions depending upon their severity.Section 6. Depending on their severity, violations are subject to any or all of the following sanctions:

Plain English / Plain Language revisions:

The phrase “otherwise known as the” is used twice in this section. I deleted it because it is wordy.

BeforeAfter
Section 7. Applicability of Other Laws. In addition to banking laws and BSP regulations, credit card transactions are also covered by other laws such as Republic Act (R.A.) No. 7394, otherwise known as the Consumer Act of the Philippines and R.A. No. 8484, otherwise known as the Access Devices Regulation Act.Section 7. Applicability of Other Laws. In addition to banking laws and BSP regulations, credit card transactions are also covered by other laws such as Republic Act No. 7394 “Consumer Act of the Philippines” and Republic Act No. 8484 “Access Devices Regulation Act”.


Note: You’ll notice that I started some sentences in this post with the conjunction “But.” Our English teachers from kindergarten up to college have taught us never to begin a sentence with the conjunctions “And” or “But.” On the contrary, it is perfectly okay to begin sentences with these conjunctions. In his article “The Truth About Conjunctions as Sentence-Starters” (Michigan Bar Journal, August 2010), Mark Cooney cites current and past US Supreme Court justices who used “But” and “And” to start some of their sentences. These are Chief Justice Roberts, Stevens, Scalia, Kennedy, Thomas, Breyer, Ginsburg, Alito, Sotomayor, Oliver Wendell Holmes, Benjamin Cardozo, and Thurgood Marshall.



Related posts (Before and After revisions of selected government communications):

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