The rapid digital transformation of the Philippine financial landscape has birthed a surge in Financial Technology (FinTech) solutions, making credit more accessible than ever. However, this convenience has also paved the way for "fly-by-night" lenders and predatory apps.

Under Philippine law, lending is a highly regulated activity. To protect yourself from identity theft, exorbitant interest rates, and illegal collection practices, you must perform comprehensive due diligence before hitting "Apply."

Here is the definitive guide to verifying a loan offer’s legitimacy within the Philippine legal framework.

1. Check the SEC Registration (The Gold Standard)

In the Philippines, all lending and financing companies must be registered with the Securities and Exchange Commission (SEC). A simple "DTI registration" is insufficient for an entity to lend money to the public.

Certificate of Incorporation: This proves the company is a registered legal entity.
Certificate of Authority (CA): This is the most crucial document. It specifically grants the company the legal power to operate as a lending or financing company.
Actionable Step: Visit the SEC Website and navigate to the list of "Lending Companies" or "Financing Companies" with a valid CA. If the name of the app or company is not on that list, it is operating illegally.

2. Compliance with the Truth in Lending Act (R.A. 3765)

Legitimate lenders are legally mandated to provide full transparency regarding the cost of credit. Under the Truth in Lending Act, lenders must disclose the following in writing before the transaction is consummated:

The cash price or delivered cost of the service.
The amount to be credited as a downpayment or trade-in (if applicable).
The total amount to be financed.
Individual charges (processing fees, service fees, insurance) fabricated clearly.
The Effective Interest Rate (EIR), not just the monthly nominal rate.

Red Flag: If a lender deducts large "service fees" upfront (e.g., you borrow ₱5,000 but only receive ₱3,200), they may be violating the ceiling on interest rates and charges or failing to disclose the true cost of the loan.

3. National Privacy Commission (NPC) Registration

Online lending apps (OLAs) handle sensitive Personal Identifiable Information (PII). Legitimate apps must comply with the Data Privacy Act of 2012 (R.A. 10173).

Check the Privacy Notice: A legitimate lender will clearly state how your data is used.
App Permissions: If an app requires access to your contacts, social media accounts, or gallery as a condition for the loan, proceed with extreme caution. The NPC has issued circulars (e.g., NPC Circular No. 20-01) prohibiting the "contact-tracing" of debtors for the purpose of debt collection.

4. Scrutinize Debt Collection Practices

The SEC Memorandum Circular No. 18 (Series of 2019) prohibits unfair debt collection practices. Legitimate companies will never:

Use threats of violence or profane language.
Contact people in your phone directory who are not your co-makers or guarantors.
Post your personal information or "shame" you on social media.
Claim to be lawyers or court officials to intimidate you.

5. Verify Physical Presence and Contact Info

Illegal lenders often operate solely through social media (Facebook/Telegram) or unverified APK files.

Official Website: Legitimate lenders have professional websites ending in .com.ph or .ph (though .com is common, check for SSL security—the "lock" icon in the URL).
Physical Address: They must have a registered office address in the Philippines.
Customer Service: Test their hotlines. If the only way to contact them is through a random mobile number or a generic Gmail/Yahoo address, it is a significant risk.

Summary of Legitimacy Checklist

Feature	Legitimate Lender	Potential Scam/Illegal OLA
SEC Status	Registered with a Certificate of Authority (CA).	Unregistered or only has DTI/SEC Incorporation.
Transparency	Provides a Disclosure Statement before signing.	Hidden fees; "Surprise" deductions from the principal.
App Permissions	Limited to identity verification (ID, selfie).	Requests access to Contacts, Photos, and Social Media.
Collection	Professional and follows SEC guidelines.	Uses "debt shaming" and harassment.
Interest Rates	Clear, annual rates provided (EIR).	Extremely high daily/weekly rates.

What to Do If You Encounter a Scam

If you have been victimized by an illegal lender or are experiencing harassment, you should:

File a Complaint with the SEC: Use the SEC's online complaint portal specifically for Lending/Financing companies.
Contact the National Privacy Commission: If your data was leaked or your contacts were harassed.
Report to the PNP Anti-Cybercrime Group (PNP-ACG): Especially if threats or online shaming have occurred.

Would you like me to draft a formal complaint letter template that you can use to report an illegal lending app to the SEC?