Disputing Loan Interest and Reporting Harassment from Lending Apps (Philippine Context)

This article is a practical, law-grounded guide for borrowers dealing with excessive interest, hidden charges, and abusive collection by digital lending apps in the Philippines.

1) Snapshot: Your Core Rights

Right to clear pricing — Credit costs must be disclosed in plain terms under the Truth in Lending Act (R.A. 3765) and related regulations (e.g., finance charge, total amount payable, any penalties).
Right to fair treatment — The Financial Consumer Protection Act (R.A. 11765) guarantees equitable, transparent, and respectful treatment across banks, lending/financing companies, and payment providers.
Right to data privacy — The Data Privacy Act (R.A. 10173) protects you from unlawful contact scraping, doxxing, and non-consensual disclosure of your personal data or contacts.
Relief from unconscionable interest — Although statutory ceilings were suspended by CB Circular No. 905 (1982), courts may strike down or reduce unconscionable interest and penalties as contrary to morals and public policy. The Supreme Court has repeatedly done so (e.g., Medel v. CA, G.R. No. 131622, 27 Nov 1998).
Judgment interest — When courts re-compute obligations, 6% per annum legal interest generally applies from the proper reckoning dates (Nacar v. Gallery Frames, G.R. No. 189871, 13 Aug 2013).

2) Legal Framework (Who Regulates What)

Securities and Exchange Commission (SEC) — Primary regulator of lending companies (R.A. 9474) and financing companies. It accredits and can suspend or revoke certificates, and it acts on abusive collection practices and non-compliant lending apps.
Bangko Sentral ng Pilipinas (BSP) — Regulates banks, e-money, and certain non-bank institutions; also implements the FCP Act for entities under its supervision.
National Privacy Commission (NPC) — Enforces R.A. 10173 against unlawful data processing (e.g., contact list harvesting, public shaming).
Law enforcement — NBI Cybercrime Division / PNP Anti-Cybercrime Group for threats, extortion, cyber-harassment, and other crimes under the Revised Penal Code and the Cybercrime Prevention Act (R.A. 10175).
Courts / Small Claims — Civil actions to invalidate/adjust excessive interest, recover illegal charges, or stop harassment; Small Claims now handles money claims up to ₱1,000,000 (no lawyers required in hearings), subject to court rules.

3) How to Dispute Loan Interest and Charges

A. Collect Your Paper Trail

Contract/loan agreement, screenshots of in-app terms, statements, ledger, receipts, text messages, and all fee disclosures at sign-up/renewal.
Evidence of changes in pricing (versions/dates of terms), and proof of payments.

B. Check for Disclosure Violations (R.A. 3765)

Verify that you were given, before consummation of the loan:

Finance charge (total cost of credit in pesos);
Annual Percentage Rate (APR) or effective yield;
Itemization of fees (processing, service, collection, convenience);
Penalty and default rates (how/when they apply);
Total amount payable and payment schedule.

If missing or misleading: You have grounds to contest the charges and seek administrative sanctions (SEC/BSP), and civil remedies (e.g., reformation, restitution, damages).

C. Identify Unconscionable or Hidden Charges

Courts look at the totality of the rate structure:

Nominal monthly rates that balloon via compounding, rolling “renewal” fees, or refinance traps;
Large upfront deductions (e.g., “processing” or “service” fees) that reduce disbursed cash but not the face amount due;
Stacked penalties (late fee + penalty interest + interest-on-interest);
Ambiguous terms or unilateral changes without clear, prior consent.

Doctrine in practice: Even without a statutory cap, courts reduce or nullify interest and penalties if rates are “iniquitous or unconscionable” (e.g., Medel v. CA), and may apply 6% p.a. going forward (Nacar). Penalty charges can also be reduced when they are excessive (Civil Code arts. 1229, 2227).

D. Do the Math (Simple APR Spot-Check)

A rough test to see if your effective annualized cost is extreme:

Compute net proceeds = amount you actually received after all deductions.
Compute total cost = total you paid (or must pay) – net proceeds.
Compute effective rate ≈ (total cost ÷ net proceeds) ÷ loan term (in years).

If the implied APR is far higher than what was disclosed, or the rate explodes due to fees/compounding, you have strong grounds to challenge.

E. Write a Dispute & Validation Letter (Pre-Complaint)

Send to the app, its registered company, and (if applicable) its collection agency:

Demand a complete statement of account, itemized fees, basis of rates, and original signed terms you accepted.
Cite R.A. 3765, R.A. 11765, and the jurisprudence on unconscionable interest.
Suspend collection on disputed portions and cease third-party contact while the dispute is pending.
Set a deadline (e.g., 7–10 business days) for a written, itemized response.

A sample template is provided at the end.

F. Escalate if Not Resolved

SEC (for lending/financing companies) — File a complaint with evidence (agreements, screenshots, collection messages, calculations).
BSP (if the lender is a bank/e-money issuer) — File a financial consumer complaint.
Civil action / Small Claims — Seek re-computation, refund of illegal charges, and damages; ask for injunction against abusive collection.
Barangay conciliation may be required for local, simple money disputes between residents before filing in court (check exceptions).

4) Stopping Harassment and Abusive Collection

A. What Counts as Harassment

Shaming messages to your family, workmates, or contact list; group chats naming you “delinquent.”
Threats of criminal cases for purely civil debt, violent threats, or extortion (e.g., “Pay or we will post your photos”).
Non-consensual data use: scraping your contact list, sending bulk texts to non-consenting third parties, or posting your personal data/photos.
Calls at unreasonable hours, repeated calls to your employer, or use of obscene/insulting language.

These may violate R.A. 11765 (unfair debt collection), R.A. 10173 (unlawful processing/disclosure), and the Revised Penal Code (grave threats, unjust vexation, libel/slander), and may also constitute cyber offenses under R.A. 10175 when done online.

B. Immediate Steps

Document everything — screenshots (with timestamps), call logs/recordings (if lawful), URLs, and witness statements.
Send a Cease-and-Desist (C&D) invoking R.A. 11765 and R.A. 10173; withdraw any alleged consent to contact your phonebook; demand deletion of scraped data.
Notify your contacts (briefly) that unauthorized messages may be harassment; ask them to screenshot any messages they receive.
Report:
- NPC — for privacy violations (contact scraping, public shaming).
- SEC — for abusive collection by lending or financing companies.
- NBI/PNP Cybercrime — for threats, extortion, identity theft, defamation, and cyber-harassment.
Consider protective relief — If harassment is severe, consult counsel on injunctions and damages.

C. Red Flags Suggesting an Illegal or Non-Compliant App

No SEC registration or business name; no physical address.
Refuses to provide full disclosure or copy of your signed terms.
Demands access to contacts/photos as a condition to lend.
Auto-debit without express authorization; unilateral rate changes.
Collection via public shaming posts or mass messages to your phonebook.

5) Practical Playbook (Step-by-Step)

Audit the debt: Gather documents; compute effective APR; list every fee and penalty.
Dispute in writing: Demand validation, disclosure compliance, and re-computation; ask to pause collections on disputed amounts.
C&D harassment: Revoke data-processing consent for non-essential purposes; demand deletion; warn of regulatory complaints.
File regulatory complaints (parallel tracks are fine):
- SEC (lending/financing companies);
- BSP (banks/e-money);
- NPC (privacy);
- NBI/PNP Cybercrime (threats/extortion/defamation).
Pursue civil remedies: Small Claims or regular court for re-computation, refund, damages, and injunction if needed.
Preserve evidence continuously until resolution.

6) Frequently Asked Questions

Q: “There’s no usury law anyway—can’t they charge anything?” A: The ceilings were suspended (CB Circular 905), but courts still strike down or reduce iniquitous/unconscionable interest and penalties. The state also penalizes non-disclosure and unfair practices.

Q: Can a lender threaten criminal charges for late payment? A: Ordinary loan non-payment is civil, not criminal. Threats or extortion can themselves be crimes.

Q: The app messaged my boss and parents. Is that legal? A: Mass-messaging non-consenting contacts or public shaming likely violates R.A. 10173 and unfair collection standards; report to NPC and SEC/BSP as applicable.

Q: Can I stop paying entirely if I’m disputing charges? A: You remain liable for the principal and lawful charges. Many borrowers tender the undisputed amount while contesting the rest. Put all communications in writing.

Q: What if I already paid? A: You can still pursue refunds/adjustments for illegal or undisclosed charges, plus damages in proper cases.

7) Evidence Checklist

Loan/application forms and KYC screenshots;
Versions of Terms & Conditions at sign-up/renewal;
Disbursement proof (bank credit SMS, e-wallet entries);
Repayment receipts and statements;
All collection communications (texts, chat, calls, emails, posts);
Proof of contact scraping (screenshots from contacts who were messaged);
Written disputes and the lender’s responses (or silence).

8) Model Letters (Copy–Paste, Then Personalize)

A. Dispute & Validation Letter (Interest/Fees)

Subject: Dispute of Charges and Request for Validation – [Loan No./Account No.]

I am disputing the accuracy and legality of the interest, fees, and penalties applied to my account. Under R.A. 3765 (Truth in Lending Act) and R.A. 11765 (Financial Consumer Protection Act), please provide within 10 business days:

the complete statement of account and itemization of all charges;

the APR/finance charge and computation methodology;

a copy of the signed agreement/terms and any subsequent changes; and

the legal/legal-regulatory basis for penalty interest and compounding.

Pending validation, kindly suspend collection on disputed amounts. If undisclosed or unconscionable charges remain, I will seek regulatory and judicial remedies, including re-computation consistent with jurisprudence (e.g., Medel v. CA) and application of lawful interest (Nacar).

Sincerely, [Name, mobile, email] [Date]

B. Cease-and-Desist (Harassment & Data Privacy)

Subject: Cease and Desist – Unlawful Collection and Data Privacy Violations

You and your agents must immediately cease: (a) contacting my phonebook or workplace, (b) sending threatening/abusive messages, and (c) disclosing my personal data to third parties. These actions violate R.A. 11765 and R.A. 10173.

I hereby revoke any purported consent to access my contacts or to process my data beyond what is necessary to service the loan. Delete any scraped data and confirm deletion in writing within 5 business days. I am filing reports with the SEC/NPC and, if the threats persist, with law enforcement for possible criminal charges.

Sincerely, [Name, mobile, email] [Date]

9) Litigation & Settlement Notes

Re-computation blueprint often granted by courts: principal minus illegal fees; reasonable contractual interest (if valid) or 6% p.a. if unconscionable; moderated penalties; then compute balance as of judgment.
Evidence wins cases: Keep meticulous records and timeline.
Settlement leverage increases after you file regulatory complaints and show a credible litigation plan with computations.

10) Preventive Tips for Future Borrowing

Use regulated lenders with clear SEC/BSP credentials and transparent pricing.
Refuse apps that insist on contact list or photo gallery access.
Calculate the effective APR before accepting; avoid rollovers that mask the cost.
Keep offline backups (PDFs/screenshots) of terms and disclosures at the time of borrowing.

Final Word

You can dispute excessive or undisclosed charges and you don’t have to tolerate harassment. Philippine law and jurisprudence give borrowers multiple avenues—regulatory, civil, and criminal—to correct abuses. If the amounts or harm are significant, consult counsel to tailor a re-computation and complaint strategy to your facts.