Filing Complaints Against Online Lenders for Excessive Interest and Harassment in the Philippines

This practitioner-style article explains the legal bases, regulators, remedies, and filing steps for borrowers and third parties aggrieved by online lending practices in the Philippines. It is written for non-lawyers and lawyers alike and focuses on lending companies, financing companies, and app-based lenders.

1) Who regulates what?

Securities and Exchange Commission (SEC) – Primary regulator of lending companies and financing companies under the Lending Company Regulation Act of 2007 (RA 9474) and related rules. Handles: licensing/registration, unfair debt collection, deceptive practices, illegal online lending platforms (OLPs), and corporate compliance.
Bangko Sentral ng Pilipinas (BSP) – Regulates banks, electronic money issuers, and other BSP-supervised financial institutions (not ordinary lending companies). Handles: abusive practices by banks/e-wallets, disclosure violations, and redress under the Financial Consumer Protection Act.
Financial Consumer Protection Act of 2022 (RA 11765) – Cross-cutting statute empowering the SEC, BSP, Insurance Commission (IC), and CDA to protect financial consumers, require internal complaint handling, conduct mediation/conciliation, issue cease-and-desist orders, and impose administrative fines.
National Privacy Commission (NPC) – Enforces the Data Privacy Act of 2012 (RA 10173). Handles: contact harvesting, unlawful disclosure of borrowers’ debts to phonebook contacts, doxxing, and other privacy abuses.
Law enforcement (PNP/NBI – Cybercrime) – Handles criminal acts: grave/coercion; threats; extortion; cyberlibel; unjust vexation; and privacy crimes.
Courts – Civil actions to reduce/void unconscionable interest and penalties, recover overpayments, and claim damages; criminal complaints for penal violations; small claims for straightforward money disputes.

2) Is “excessive interest” illegal even if the borrower “agreed”?

2.1 Usury ceilings vs. unconscionability

While statutory usury ceilings have long been suspended, Philippine courts routinely strike down or reduce interest rates that are “unconscionable” or “iniquitous.”
The Supreme Court has repeatedly voided/reduced rates (e.g., Medel v. Court of Appeals, G.R. No. 131622, 27 Nov 1998) where the stipulated interest or penalties “shock the conscience,” even if assented to in a contract.
Key doctrines used by courts:
- Freedom to contract is not absolute. Courts may annul stipulations contrary to morals, good customs, public policy (Civil Code Arts. 1306, 1409).
- Equitable reduction of penalties (Art. 1229) and interest deemed penalty in substance.
- Abuse of rights (Arts. 19–21): liability for willfully causing damage contrary to justice and good faith.

2.2 What counts as “unconscionable”?

No single magic number. Courts look at:

Nominal interest rate and the effective rate after add-ons, processing fees, “service charges,” penalties, and compounding.
Borrower’s sophistication and bargaining power; whether terms were hidden or rushed in an app click-wrap.
Short tenors with rollover/“refinance” pressures creating debt traps.
Penalty stacking: per-day surcharges on top of high nominal rates.

Practical tip: Preserve screenshots/receipts showing all charges and the repayment schedule to compute the Annual Percentage Rate (APR) or an equivalent effective annual cost. Courts and regulators are persuaded by effective cost, not just nominal rates.

3) Harassment and unfair debt collection practices

Even if a debt is valid, collectors may not:

Use or threaten violence, obscene/insulting language, or shaming tactics (e.g., “wanted” posters, group chats, social-media blasts).
Disclose or threaten to disclose the debt to contacts, employer, or the public without lawful basis.
Contact third persons other than to locate the borrower, and even then without disclosing the debt.
Impersonate public officials, misrepresent the amount or legal status of the debt, or falsely threaten arrest, garnishment, or criminal cases for mere non-payment (non-payment of private debt is not a crime).
Call or message at unreasonable times, in a repetitive, disruptive manner, or after being told to route communications to counsel/representative.
Seize property without a court order or valid chattel mortgage with proper demand/notice.

These prohibitions are embodied in SEC rules on unfair debt collection binding on lending/financing companies, and mirrored for BSP-supervised institutions under the Financial Consumer Protection framework.

4) Where to complain (choose one or more as appropriate)

Start with the lender’s Internal Dispute Resolution (IDR). Under RA 11765, regulated entities must have Financial Consumer Assistance Mechanisms (FCAM/IDR). File a dated written complaint and demand an IDR reference number. This becomes crucial evidence for regulators.
Securities and Exchange Commission (SEC) – if the entity is a lending company/financing company or runs an online lending platform. You can complain about:
- Harassment/unfair collection, shaming, contacting your phonebook.
- Deceptive pricing (hidden fees; bait-and-switch).
- Unregistered/illegal lenders or unlicensed apps. Possible outcomes: cease-and-desist orders, app takedowns, license suspension/revocation, administrative fines, referrals for prosecution, and restitution/refund directives.
Bangko Sentral ng Pilipinas (BSP) – if it’s a bank, EMI, or BSP-supervised firm (some app-based lenders are bank partners). Possible outcomes: directives to correct, penalties, consumer redress, and supervisory action.
National Privacy Commission (NPC) – for privacy violations (contact scraping; disclosure of debt to contacts; doxxing; over-collection without lawful basis; failure to obtain valid consent; failure to implement security measures). Possible outcomes: compliance orders, administrative fines/penalties, and criminal referrals.
Law enforcement (PNP/NBI – Cybercrime) – if there are threats, extortion, cyberlibel, identity theft, or stalking. Bring copies of messages, caller IDs, recordings (see Sec. 8 below on recording).
Courts (civil) – to reduce/void interest and penalties, stop harassment via injunction, recover overpaid interest, and seek moral, exemplary, and attorney’s fees.
Telecoms and platforms – report SMS spam and impersonation accounts; request number/account blocking and content takedown. Keep ticket numbers as evidence.

5) Evidence: what to gather and how to preserve it

Identity of the lender/collector: full business name, app name, website, addresses, registration numbers (if available).
Contract trail: screenshots of app pages (pricing, repayment), e-mails/SMS, e-contract, disclosure statements, receipts, and ledger/transaction history.
Harassing communications: screenshots (include timestamps and sender IDs), audio recordings, call logs, voicemail.
第三-party impact: statements from contacts who were messaged; screenshots showing disclosure/shaming.
Computation sheet: a simple table showing principal, all fees/charges, dates, payments, penalties, and effective rate.
IDR proof: copy of your internal complaint and the entity’s reply or proof of no reply after the standard resolution window.
Chain of custody: export chat threads as PDF; avoid editing; back up to cloud/USB. Name files by date (YYYY-MM-DD) and source.

6) How to compute and present an “excessive interest” claim

List cash actually received (net of “processing fees” deducted up front).
List all cash paid (principal + interest/penalties/fees) with dates.
Reconstruct the schedule: due dates, number of rollovers/refinances.
Compute the effective cost:
- For short-term loans, use effective daily cost × 365 to estimate an annualized figure.
- Note any compounding or per-day penalties added on top of interest.
Flag indicators of unconscionability:
- Interest that doubles the debt within weeks.
- Multiple layers of fees for the same event (e.g., “late fee,” “penalty interest,” “collection fee”).
- Ambiguous or tiny-font disclosures in the app.
Prayer for relief: reduction of interest/penalties to reasonable levels, offsetting against amounts already paid, refund of overpayments, and damages for harassment.

7) Step-by-step complaint playbooks

7.1 SEC complaint (lending/financing companies; online lending apps)

Prepare a narrative (1–2 pages): who you are, loan details, events, specific unfair acts, and relief sought.
Attach evidence (see Sec. 5).
State the rules breached: unfair debt collection; deceptive practices; operating without/against license; failure to disclose total cost.
File via SEC’s public complaint channels (in person or online portal, if applicable).
Cooperate with follow-ups; provide raw files if requested.
Parallel actions: If there are privacy violations, file with NPC at the same time.

7.2 NPC complaint (privacy abuses)

Identify the personal data processed (contacts, photos, messages) and what was disclosed and to whom.
Cite lawful basis claimed by the lender (usually “consent” or “contract”) and why it fails (e.g., bundled consent; disproportionate; unrelated to loan performance).
Attach screenshots of app permissions, shaming messages, and contact statements.
Request: cease processing, delete unlawfully gathered data, notify affected contacts, penalize the entity.

7.3 BSP complaint (banks/e-money issuers)

File first through the provider’s IDR; wait for or document no resolution.
Elevate to BSP’s consumer assistance channel with the IDR reference number.
Ask for supervisory action and consumer redress (fee reversals, correction of records, interest re-computation).

7.4 Civil action (with or without a lawyer)

Reliefs: declaration that interest/penalties are unconscionable, re-computation, refund, and damages for harassment (moral/exemplary).
Small Claims may be available for modest sums with simplified procedure (no lawyers required), though complex harassment/privacy claims usually require regular civil actions.
Barangay conciliation typically does not apply when the lender is a corporation (only natural persons are parties to barangay proceedings), so you may file directly in court.

8) Special topics and common pitfalls

Recording calls/messages. Philippine jurisprudence allows a party to a conversation to record it without violating the Anti-Wiretapping Act; however, recording third parties’ private communications where you are not a participant is illegal. When unsure, focus on texts, chats, and voicemails and seek advice before surreptitious recordings.
Threats of arrest or criminal cases for non-payment. Non-payment of a private loan is civil, not criminal. Arrest without a court process is unlawful. Criminal liability may arise only for separate acts (e.g., bounced checks, fraud, threats, privacy crimes).
Self-help repossession. Lenders cannot seize property without due process. For chattel-mortgage loans, they must follow demand/notice and judicial process (or strictly compliant extrajudicial foreclosure).
Third-party victims (borrower’s contacts). If you were harassed despite having no relation to the debt, you may file with NPC (privacy breach) and SEC/BSP (unfair collection), and claim damages in court.
Credit reporting and blacklisting. Negative data must be accurate, proportional, and lawfully reported. Disputes should be raised through the lender’s IDR and, if unresolved, with the relevant regulator.

9) Model documents (you can copy-paste and fill in)

9.1 Complaint narrative (SEC/BSP/NPC)

Complainant: [Full Name], [Address], [Contact] Respondent: [Company Name, App Name], [Registration if known] Subject: Excessive interest; unfair debt collection; privacy violations

Facts:

On [date], I obtained a loan of ₱[amount] via the [app]. Net cash received was ₱[net] after deductions labeled as [fees].

The app disclosed interest at [x%] for [tenor], but the effective cost after fees and penalties reached approximately [computed APR or daily rate].

Beginning [date], respondent engaged in the following unfair/abusive acts: [calls at unreasonable hours; disclosure to [names/contacts]; shaming messages; threats of arrest], evidenced by Annexes A–G.

I filed an internal complaint on [date] (Ref. No. [IDR no.]), but the issue remains unresolved.

Violations: [Unfair debt collection rules; deceptive practices; Data Privacy Act provisions; Financial Consumer Protection Act duties].

Relief sought:

Order respondent to cease unfair collection and any disclosure of my data;

Direct deletion of unlawfully collected personal data and notification to affected contacts;

Re-compute the loan by reducing unconscionable interest/penalties to reasonable levels and refund overpayments;

Impose appropriate administrative penalties and require a corrective action plan.

Attachments: Annex A (contract/screenshots); B (payment ledger); C (harassment messages with timestamps); D (IDR complaint and reply), etc.

Certification: I certify that the facts herein are true and correct of my personal knowledge.

9.2 Computation sheet (simple)

Date	Transaction	Amount (₱)	Running Balance	Notes
2025-01-05	Loan proceeds received	4,500	4,500	500 “processing fee” deducted from ₱5,000
2025-01-12	Payment	(2,000)	2,500
2025-01-19	Late penalty	+450	2,950	10% weekly penalty
…	…	…	…	…

10) Remedies and outcomes you can expect

Administrative (SEC/BSP/NPC): cessation of abusive practices; app takedown; license suspension/revocation; administrative fines; required consumer redress (refunds, corrections); data deletion; and binding undertakings for future compliance.
Civil (Courts): declaration that interest/penalties are void or reduced; refunds/offsets; injunctions against harassment; damages (moral, exemplary) and attorney’s fees.
Criminal: penalties for privacy crimes, threats, coercion, cyberlibel, and related offenses—separate from the civil debt.

11) Practical, borrower-safe strategies

Communicate in writing (e-mail/chat) to create a verifiable trail; avoid heated calls.
Designate a representative or counsel; direct the lender to route communications through them.
Pay what is clearly due (principal and reasonable interest/fees) under protest while disputing unconscionable charges.
Never hand over OTPs or credentials.
Do not sign “voluntary” confessions of judgment or blanket waivers of data rights.
Report shaming immediately to NPC/SEC and notify your contacts that disclosure was unauthorized and under investigation.
Back up evidence and keep a timeline.

12) FAQs

Q: Can the lender jail me for non-payment? A: No. Non-payment of a private debt is civil, not criminal. Separate crimes (e.g., issuing a bad check, threats) are different matters.

Q: The lender says I consented to access my contacts. Is that valid? A: Consent must be informed, freely given, specific, and proportionate. Blanket access for “collection purposes” does not justify broadcasting your debt to friends, co-workers, or family.

Q: They keep calling my boss. What can I do quickly? A: Send a written demand to stop third-party contacts and route all communications to you or your counsel. Escalate to SEC/NPC with evidence.

Q: What is a “reasonable” rate if the court reduces mine? A: Courts often peg reduced rates to prevailing market or legal interest benchmarks and strike down per-day penalties that pile on top of high rates. The exact figure is case-specific.

13) Checklist before you file

I identified the proper regulator (SEC vs. BSP)
I filed an internal complaint and kept the reference number
I preserved screenshots, contracts, messages, and call logs
I prepared a computation sheet showing effective cost
I drafted a clear narrative with specific asks (cease harassment; re-compute; refund; delete data)
For shaming/contact scraping, I prepared a parallel NPC complaint
If there were threats/extortion, I prepared a police/NBI report
I considered civil remedies (injunction; damages)

Final word

You do not need to tolerate abuse to repay a loan. Philippine law allows you to question unconscionable interest and penalty stacking, and it categorically prohibits harassment, shaming, and unlawful data processing. Use the regulator pathways above, document meticulously, and ask for both behavior change (cease-and-desist) and money relief (re-computation/refund). If the situation is urgent or complex, consult counsel—many cases can be stopped quickly with the right paper trail and targeted filings.