How to Report Online Lending App Harassment to the SEC

Introduction

In the Philippines, the rapid growth of online lending applications has provided convenient access to credit for many Filipinos. However, this convenience has been marred by reports of aggressive and unethical debt collection practices, commonly referred to as harassment. These practices include incessant calls, threats, public shaming via social media, unauthorized access to personal contacts, and dissemination of private information. Such actions not only violate borrowers' rights but also contravene Philippine laws regulating lending companies.

The Securities and Exchange Commission (SEC) is the primary regulatory body overseeing lending companies, including those operating online platforms. Under Republic Act No. 9474, also known as the Lending Company Regulation Act of 2007, and its implementing rules, the SEC has the authority to investigate complaints against registered lending firms for unfair collection practices. Reporting harassment to the SEC is a crucial step for victims to seek redress, potentially leading to sanctions against the offending company, such as fines, suspension, or revocation of their license to operate.

This article provides a comprehensive guide on recognizing harassment, the legal framework protecting borrowers, the detailed process for filing a report with the SEC, required documentation, potential outcomes, and additional avenues for relief. It aims to empower individuals facing such issues to take informed action.

Understanding Harassment by Online Lending Apps

Harassment in the context of online lending typically involves tactics designed to intimidate or coerce borrowers into repayment. Common forms include:

• Repeated and Intrusive Communications: Bombarding the borrower with calls, texts, or emails at unreasonable hours (e.g., late at night or early morning), often exceeding what is considered fair under debt collection guidelines.
• Threats and Intimidation: Verbal or written threats of legal action, arrest, physical harm, or damage to reputation without basis.
• Public Shaming: Posting defamatory content on social media, contacting the borrower's family, friends, or employer to disclose debt details, or using "name-and-shame" tactics.
• Data Privacy Violations: Unauthorized access to the borrower's phone contacts, photos, or other personal data, often enabled through app permissions, and using this information for collection purposes.
• Misrepresentation: Falsely claiming affiliation with law enforcement or government agencies to pressure repayment.
• Excessive Interest and Fees: While not always direct harassment, predatory lending practices like usurious interest rates (beyond the legal caps) can exacerbate financial distress and lead to aggressive collections.

These behaviors are not only unethical but illegal. The SEC classifies them as unfair debt collection practices, which can result in administrative penalties. Victims may experience emotional distress, anxiety, or even suicidal ideation in severe cases, highlighting the urgency of addressing such complaints.

Legal Framework in the Philippines

Several laws and regulations govern online lending and protect borrowers from harassment:

• Lending Company Regulation Act of 2007 (RA 9474): Mandates that all lending companies register with the SEC and adhere to fair practices. Section 4 prohibits usury, while implementing rules require transparent terms and prohibit abusive collections.
• SEC Memorandum Circular No. 18, Series of 2019: Specifically regulates online lending platforms, requiring them to register as financing or lending companies. It outlines prohibitions on unfair collection practices, including harassment, and mandates compliance with data privacy laws.
• Data Privacy Act of 2012 (RA 10173): Protects personal information. Online lenders must obtain consent for data access and cannot misuse it for shaming or unauthorized sharing. Violations can be reported to the National Privacy Commission (NPC), but the SEC often handles integrated complaints.
• Cybercrime Prevention Act of 2012 (RA 10175): Addresses online threats, cyber libel, or identity theft if harassment involves digital means.
• Consumer Protection Laws: Under the Consumer Act of the Philippines (RA 7394), borrowers are entitled to fair treatment, and the Department of Trade and Industry (DTI) may collaborate with the SEC on related issues.
• Civil Code Provisions: Articles 19, 20, and 26 provide grounds for civil damages for abuse of rights, while criminal liabilities may arise under the Revised Penal Code for threats or grave coercion.

The Bangko Sentral ng Pilipinas (BSP) regulates banks and non-bank financial institutions, but purely online lending apps fall under SEC jurisdiction unless they are BSP-licensed. In 2020, the SEC imposed a moratorium on new online lending registrations to curb abuses, and it continues to monitor compliance through regular audits.

Steps to Report Harassment to the SEC

Filing a complaint with the SEC is straightforward but requires thorough preparation. The process is administrative in nature, focusing on regulatory violations rather than criminal prosecution (though referrals to other agencies are possible). Here's a step-by-step guide:

1. Gather Evidence: Document all instances of harassment meticulously. This is critical for substantiating your claim.

   • Screenshots of messages, emails, or social media posts.
   • Call logs or recordings (if legal; note that one-party consent is generally allowed in the Philippines for personal protection).
   • Loan agreement copies, including terms, interest rates, and app permissions.
   • Proof of payments made.
   • Any correspondence with the lender.

2. Verify the Lender's Registration: Check if the app is registered with the SEC via their website (sec.gov.ph) under the "List of Registered Lending Companies" or "List of Registered Financing Companies." Unregistered lenders are illegal, and reporting them can lead to cease-and-desist orders.

3. Prepare the Complaint Form: Download the SEC's Complaint Form from their website or obtain it from an SEC office. The form requires:

   • Your personal details (name, address, contact).
   • Details of the lending company (name, app, registration number if known).
   • A narrative of the harassment incidents, including dates, times, and descriptions.
   • Relief sought (e.g., cessation of harassment, refund of excessive fees, or company sanctions).

4. File the Complaint:

   • Online Submission: Use the SEC's eSPARC (Electronic Simplified Processing of Application for Registration of Corporations) portal or email to enforcement@sec.gov.ph. Attach all evidence as PDFs.
   • In-Person Filing: Visit the SEC Head Office in Pasay City or satellite offices in major cities like Cebu, Davao, or Baguio. No filing fee is required for consumer complaints.
   • For urgent cases, call the SEC hotline (02) 8818-6332 or use their online complaint form on the website.

5. Acknowledgment and Investigation: Upon receipt, the SEC will acknowledge your complaint within a few days and assign a case number. The Enforcement and Investor Protection Department (EIPD) handles such matters. They may:

   • Issue a show-cause order to the lender, requiring an explanation.
   • Conduct hearings where both parties present evidence.
   • Coordinate with other agencies if privacy or cybercrime elements are involved.

6. Follow-Up: Monitor your case via the SEC's online portal or by contacting the assigned officer. Resolution can take 30-90 days, depending on complexity.

Required Documents and Best Practices

To strengthen your complaint, include:

• Identification: Valid ID (e.g., passport, driver's license).
• Loan Documents: Application form, promissory note, disclosure statement.
• Evidence of Harassment: As detailed above.
• Affidavit: A sworn statement narrating the events, notarized for added weight.

Best practices:

• Act promptly; delays may weaken evidence.
• Avoid engaging with harassers to prevent escalation.
• Seek free legal aid from the Integrated Bar of the Philippines (IBP) or Public Attorney's Office (PAO) if needed.
• If the amount involved is small, consider small claims court for repayment disputes alongside the SEC report.

Potential Outcomes and Remedies

Successful complaints can result in:

• Administrative Sanctions: Fines up to PHP 1 million, suspension, or license revocation.
• Cease-and-Desist Orders: Immediate halt to harassing activities.
• Refunds or Adjustments: Orders for the lender to refund overcharges or waive penalties.
• Referrals: To the NPC for data breaches, DOJ for criminal charges, or BSP if applicable.
• Class Actions: If multiple victims, the SEC may consolidate complaints for broader impact.

In notable cases, like the 2019 crackdown on apps such as Cashwagon and JuanHand, the SEC revoked licenses and imposed fines based on harassment reports. Victims may also pursue civil damages separately in court for moral or exemplary damages.

Additional Avenues for Relief

While the SEC is the primary agency, consider:

• National Privacy Commission (NPC): For data misuse; file via privacy.gov.ph.
• Philippine National Police (PNP) Anti-Cybercrime Group: For online threats; report via their hotline or stations.
• Department of Trade and Industry (DTI): For consumer rights violations.
• Bangko Sentral ng Pilipinas (BSP): If the lender is BSP-regulated.
• Court Actions: File for injunctions or damages in Regional Trial Courts.

Prevention and Borrower Rights

To avoid harassment:

• Borrow only from SEC-registered apps; verify via the SEC list.
• Read terms carefully; avoid granting excessive app permissions.
• Know your rights: Lenders cannot charge interest exceeding 5% per month (per SEC guidelines), and collections must be professional.
• Use credit counseling services from organizations like the Credit Information Corporation (CIC).
• Report suspicious apps preemptively.

By understanding these processes and laws, borrowers can protect themselves and contribute to a fairer lending ecosystem in the Philippines.