Harassment & Usurious Interest by Online Lending Apps in the Philippines
A comprehensive legal survey (updated to 7 May 2025)

1. The Rise of “OLAs” and Why They Matter

Since 2017, hundreds of online lending applications (OLAs) have appeared on Philippine app stores and social-media platforms, offering-—often within minutes—small, unsecured loans of ₱1 000 – ₱30 000. These apps fill a genuine gap in financial inclusion, yet a sizeable subset employ (a) abusive collection tactics and (b) interest or fee structures that the courts routinely strike down as “unconscionable.”

2. Core Statutes & Regulations

Instrument	Key provisions relevant to OLAs
Republic Act (RA) 9474 – Lending Company Regulation Act of 2007	Licensing; minimum paid-up capital; bars “unfair collection practices.”
RA 7394 – Consumer Act	Deceptive sales/advertising; imposes civil and criminal liability.
Bangko Sentral ng Pilipinas (BSP) Circular No. 1048 (2019)	First framework recognizing digital-only lenders; AML-CFT, cybersecurity, disclosure, complaint handling.
Securities and Exchange Commission (SEC) Memorandum Circular No. 18-2019	Prohibited Collection Practices—no threats, obscenities, public shaming, or contacting persons in the borrower’s contact list.
SEC MC 28-2021	Mandatory Beneficial Ownership Disclosure for all financing/lending companies—targets dummy operators.
NPC Circular 20-01 & related Compliance Orders	Treats scraping of a borrower’s phone contacts without freely given, specific, informed and unambiguous consent as a Data Privacy Act (RA 10173) violation; fines up to ₱5 million + damages.
RA 10175 – Cybercrime Prevention Act	Harassing SMS, Viber, FB messages may constitute cyber-libel, grave threats, stalking.
RA 11765 – Financial Consumer Protection Act (2022)	Grants BSP, SEC, IC & CDA power to issue cease-and-desist (CDO) orders, conduct on-site/online inspections, and award restitution.
Supreme Court Administrative Matter 11-08-5-SC – Financial Institutions Small Claims Rule	Fast-track venue (≤ ₱1 million). Also empowers judges to reduce interest to “reasonable” levels motu proprio.

Tip: All OLAs that are not registered with the SEC or whose Certificate of Authority has been revoked are per se illegal; downloading their app is enough to create data-privacy exposure.

3. What Counts as “Harassment”?

Under SEC MC 18-2019, harassment includes, but is not limited to:

Public shaming – posting borrower photos or debt details on social media.
Contact-list harassment – SMS/calls to employer, relatives, random friends.
Obscene, profane, derogatory language.
Violence or threat thereof – “We will send police,” “We will file estafa tomorrow.”
Unreasonable or high-frequency calls – more than twice a day is presumptively abusive.

Penalties: ₱25 000 – ₱1 million per act and/or revocation of lending license; officers may face 6 mos.–10 yrs. imprisonment (RA 9474 §12).

Borrowers may also invoke:

Art. 287 Revised Penal Code – Grave Coercion (≤ 6 yrs.).
Art. 356 – Threatening to Accuse another of a crime (libelous).
RA 10173 – Unauthorized Processing of Personal Data (criminal & civil).

4. “Usury Is Dead… Long Live Unconscionability”

Central Bank Circular 905 (1982) suspended the Usury Law ceilings, but did not legalize any rate. Philippine courts retain the power to nullify or reduce interest deemed “iniquitous or unconscionable.”

4.1 Guiding jurisprudence

Case	Interest struck down	Principle
Medel v. CA (G.R. 131622, 27 Nov 1999)	5.5% per month (66% p.a.)	Courts “blot out the unconscionable portion.”
Spouses Abella v. Spouses Abella (G.R. 164632, 16 April 2010)	7% p.m.	Even if freely agreed, may be reduced to legal interest.
Chua v. Timan (G.R. 191187, 11 Feb 2015)	12% p.m. on micro-loans	Contract of adhesion + public policy.
Systemic vs. Marcelo (G.R. 242432, 10 Dec 2019)	800% p.a. OLA fees	First SC mention of “online lending”; reduced to 12% p.a.

Rule of thumb: Philippine courts generally slash anything above 3% per month (≈ 36% p.a.) unless the lender proves “extraordinary circumstances” (e.g., highly speculative business).

4.2 Regulatory “caps”

Credit-card loans – BSP Circular 1098 (2020) caps interest at 2% p.m. (24% p.a.) + ₱200 penalty cap.
Buy-Now-Pay-Later & Salary-Deduction Loans – SEC Advisory 09-2023 encourages ≤ 15% p.m. “all-in,” but not yet mandatory.
Peer-to-Peer platforms – sandboxed under BSP Test-and-Learn; rates individually approved but still subject to court review.

5. Enforcement Snapshot (2019 – 2025)

131 lending apps ordered delisted from Google Play by SEC & NPC.
87 Cease-and-Desist Orders issued; ₱37 million cumulative fines.
28 criminal informations filed with DOJ for unauthorized ACCESS to personal information (RA 10173 §28).
First conviction for OLA-based cyber-libel: People v. Fabros (RTC Br 74, Taguig, 2024) – 2 yrs. 4 mos. prisión correccional.
FCPA test case: SEC v. Pesodash Lending Corp. (OHA-Case 23-041), ongoing; SEC seeks ₱113 M restitution to 14 000 borrowers.

6. Remedies & Practical Steps for Borrowers

Goal	Where / How
Stop harassment immediately	File verified complaint with SEC Corporate Governance & Finance Department (e-mail: cgfd-complaints@sec.gov.ph); attach screenshots, call logs. CDO may issue in ≤ 72 hours.
Protect personal data	Lodge complaint with National Privacy Commission (NPC) via e-Lodge. NPC can order temporary ban on data processing within 48 hrs.
Criminal accountability	PNP-Anti-Cybercrime Group or NBI-CCD for threats/ cyber-libel; secure subpoena for telco records.
Reduce or wipe out usurious interest	Raise “unconscionability” as affirmative defense in any small-claims or collection suit; counter-claim for moral/exemplary damages.
Debt-relief negotiations	Demand summary of charges & amortization schedule (required under RA 9474 §8); insist on 0% penalty during dispute-resolution period.
Class or representative actions	Allowed under FCPA §22 (file with proper regulator); fee waivers available for indigent complainants.

7. Compliance Traps for Legitimate Fintech Lenders

Contact-list scraping: Even “permission-based” access is illegal if functionality is not necessary to grant the loan (NPC Advisory 2022-02).
Over-broad consent forms: Borrower consent does not cure DPA violations.
Call-center outsourcing: Lenders are jointly and solidarily liable for BPO harassment.
“Service fees” disguised as interest: Courts include them in APR when assessing unconscionability.
Auto-debit from e-wallets: Requires separate, revocable e-mandate under BSP Circular 1108.

8. Outlook

Pending bills in the 19ᵗʰ Congress seek to:
- cap all micro-credit at 36% p.a. “all-in”;
- criminalize “doxxing” borrowers (up to 6 yrs. jail);
- create a centralized Fintech Registry with real-time public API.
Google & Apple now require proof of SEC registration before hosting Philippine lending apps (effective policy 31 Jan 2024).
Reg-tech push: BSP’s Digital Regulatory Reporting (DRR) Phase 2 will force API-level submission of loan-level data, making algorithmic detection of usury feasible by 2026.

9. Key Take-Aways

Harassment is never part of lawful debt-collection; it exposes officers and agents to criminal and administrative sanctions.
There is still no statutory interest-rate ceiling, but Philippine courts have developed a predictable “unconscionability” doctrine—anything above ~36% p.a. is in the danger zone.
Borrowers are not powerless: Rapid-response mechanisms exist at the SEC and NPC, and the Financial Consumer Protection Act adds teeth—including restitution orders and personal liability for directors.
Legitimate fintechs should front-load compliance (privacy-by-design, ethical AI credit scoring, trained collectors) rather than treat fines as a cost of doing business.

Need help?

SEC Hotline: 02-5322-7696

NPC Complaints Desk: complaints@privacy.gov.ph

PNP-ACG Cyber Complaint Center: 0998-598-8116

(This article is for informational purposes only and does not constitute legal advice. For advice on a specific situation, consult a Philippine lawyer specialized in fintech or consumer protection.)