In the Philippines, the rise of Financial Technology (FinTech) and Online Lending Platforms (OLPs) has brought both financial inclusion and, unfortunately, a surge in predatory collection methods. When debt collectors cross the line into harassment, shaming, or coercion, the Securities and Exchange Commission (SEC) serves as the primary regulatory body for corporate lenders.
I. Legal Framework: SEC Memorandum Circular No. 18 (Series of 2019)
The cornerstone of borrower protection against aggressive collection is SEC Memorandum Circular No. 18, Series of 2019 (MC 18). This circular provides the "Prohibition on Unfair Debt Collection Practices" and applies to all lending companies and financing companies.
Prohibited Acts under MC 18:
- Physical Violence or Threats: Using or threatening to use physical force to harm the person, reputation, or property of the borrower or their family.
- Obscene or Profane Language: Using insults or foul language to intimidate the borrower.
- Disclosure of Adverse Information: Threatening to publicize the borrower's debt or personal information (e.g., posting on social media, contacting the borrower's contact list without consent).
- False Representation: Claiming to be a lawyer, police officer, or government agent, or falsely claiming that a criminal case (like Estafa) has been filed when it has not.
- Harassing Contact: Making calls or sending messages at unreasonable hours (typically before 6:00 AM or after 10:00 PM), unless the debt is more than 60 days past due or the borrower gave express consent.
- Contacting the Contact List: Accessing the borrower’s phone contacts to inform them of the debt or to shame the borrower.
II. Determining Jurisdiction
Before filing, ensure the entity is under SEC jurisdiction. The SEC regulates Lending Companies and Financing Companies (including most mobile lending apps).
Note: If the creditor is a Bank, the complaint should be filed with the Bangko Sentral ng Pilipinas (BSP). If it is a Cooperatives, it falls under the Cooperative Development Authority (CDA).
III. The Filing Process: Step-by-Step
Filing a formal complaint requires a systematic approach to ensure the SEC has sufficient grounds to take administrative action.
1. Evidence Gathering
A complaint is only as strong as its proof. You must document the harassment:
- Screenshots: Capture all threatening text messages, emails, or social media posts.
- Call Logs: Document the frequency and timing of calls.
- Affidavits: If third parties (friends or family) were contacted, obtain their sworn statements regarding the communication they received.
- Proof of Identity: Know the exact name of the lending company (check the "About" section of the app or their Certificate of Authority).
2. Filing the Formal Complaint
Complaints can be submitted to the SEC Financing and Lending Companies Division (FLCD).
- Online Portal: Use the SEC i-Message platform or the dedicated email for complaints (flcd_queries@sec.gov.ph).
- Formal Letter: Address a formal letter of complaint to the Director of the Corporate Governance and Finance Department (CGFD).
3. Required Information
The complaint must include:
- Full name and contact details of the complainant.
- Registered name of the Lending/Financing Company.
- A clear, chronological narration of the facts.
- Specific violations of MC 18.
- Attachments of all gathered evidence.
IV. SEC Administrative Sanctions
If the SEC finds the lending company in violation of MC 18, the company may face the following penalties:
| Violation | Penalty |
|---|---|
| First Offense | Fine of ₱25,000 to ₱50,000 |
| Second Offense | Fine of ₱50,000 to ₱100,000 and/or suspension of lending activities |
| Third Offense | Fine of up to ₱1,000,000 and/or Revocation of Certificate of Authority |
V. Concurrent Legal Remedies
Filing with the SEC is an administrative remedy focused on the company’s license. Borrowers may also pursue other legal avenues:
- National Privacy Commission (NPC): If the lender accessed your phone contacts or posted personal details online, file a complaint for violation of the Data Privacy Act of 2012.
- Criminal Charges: If there are direct threats to life or grave insults, a criminal complaint for Grave Threats, Unjust Vexation, or Cyberlibel (under the Cybercrime Prevention Act) may be filed through the Prosecutor's Office or the PNP Anti-Cybercrime Group.
- Civil Action: For damages resulting from the loss of reputation or emotional distress.
VI. The "Truth in Lending Act" (Republic Act No. 3765)
In addition to unfair collection, lenders must comply with the Truth in Lending Act. They are required to provide a Disclosure Statement before the consummation of the loan, clearly stating:
- The cash price or amount to be loaned.
- Down payments or credits.
- All charges (interest, service fees, processing fees) not incident to the extension of credit.
- The total amount to be financed.
Failure to provide this disclosure is a separate ground for an SEC complaint.