In the Philippines, borrowing money has become increasingly accessible through traditional financing companies, banks, and the proliferation of online lending platforms. However, this convenience has also given rise to numerous illegal lenders, predatory loan apps, and scam operations that charge exorbitant interest rates, demand upfront fees, and employ harassment tactics in debt collection.

The consequences of dealing with an illegitimate lender can be severe: usurious interest rates exceeding legal limits, invasion of privacy through contact spamming, public shaming, and even criminal liability for the lender under anti-cybercrime and anti-harassment laws.

This article provides a comprehensive, step-by-step guide on how to verify the legitimacy of any loan company operating in the Philippines, based on the current regulatory framework as of December 2025.

I. The Legal Framework Governing Lending Companies

Republic Act No. 9474 (Lending Company Regulation Act of 2007) and its Implementing Rules and Regulations (IRR)
This is the primary law governing non-bank lending companies. Any entity engaged in granting loans to the public as a regular business must secure a Certificate of Authority (CA) from the Securities and Exchange Commission (SEC). Mere registration as a corporation is NOT sufficient.
Republic Act No. 8556 (Financing Company Act of 1998)
Governs financing companies (those that provide sales financing, leasing, factoring, etc.). They also require a separate Certificate of Authority from the SEC.
Republic Act No. 3765 (Truth in Lending Act)
Requires full disclosure of the effective interest rate, finance charges, and all fees before the loan is granted.
Bangko Sentral ng Pilipinas (BSP) Supervision
Banks, universal/commercial banks, thrift banks, rural banks, and non-bank financial institutions with quasi-banking functions fall under BSP supervision. Only BSP-registered entities may accept deposits or offer deposit-like products.
Republic Act No. 10175 (Cybercrime Prevention Act of 2012) and Republic Act No. 10173 (Data Privacy Act of 2012)
Online lending platforms that harass borrowers or misuse personal data violate these laws.
SEC Memorandum Circular No. 18, Series of 2019 and subsequent circulars
Specifically regulate online lending platforms (OLPs). All OLPs must be registered Philippine corporations with a minimum paid-up capital of ₱10 million and must secure a Certificate of Authority from the SEC.

II. Step-by-Step Guide to Verify Legitimacy

Step 1: Check if the lender is SEC-registered with a valid Certificate of Authority (CA)

This is the single most important step.

Visit the official SEC website: https://www.sec.gov.ph/
Go to "Company Registration and Monitoring Department" → "List of Registered Lending Companies and Financing Companies" or use the direct link: https://www.sec.gov.ph/lending-companies-and-financing-companies-2/
There are separate lists for:
- Lending Companies with Certificate of Authority
- Financing Companies with Certificate of Authority
- Online Lending Platforms (OLPs) with Certificate of Authority
Search the company name exactly as it appears in their app or advertisements.
If the company is NOT on the list, it is operating illegally.

Additional SEC verification tools:

SEC eSPARC (https://esparc.sec.gov.ph/) – search company registration
SEC i-View (https://iview.sec.gov.ph/) – view detailed company filings
Check the "Advisories" section for companies with Cease and Desist Orders (CDOs)

Step 2: Verify if the lender is BSP-supervised (for banks and quasi-banks)

Visit https://www.bsp.gov.ph/Pages/Directories.aspx
Check the lists of:
- Banks (Universal, Commercial, Thrift, Rural, Cooperative)
- Non-Bank Financial Institutions with Quasi-Banking Functions
- Money Service Businesses
- Virtual Asset Service Providers
If the lender claims to be a bank but is not on the BSP list, it is fake.

Step 3: Confirm that the lender does NOT appear on SEC or BSP warning lists

SEC regularly publishes advisories against illegal lending apps and companies operating without CA.
As of December 2025, over 300 online lending apps have been flagged or ordered closed by the SEC.
Common illegal operators include many apps with “Cash”, “Peso”, “Lend”, “QuickLoan” in their names that are actually operated by foreign nationals without proper CA.

Step 4: Examine the loan disclosure statement (Truth in Lending Act compliance)

A legitimate lender is required by law to provide, before loan approval, a disclosure statement containing:

Total amount to be financed
Finance charges
Effective interest rate (must be stated as monthly and annual)
Schedule of payments
All fees and penalties

If they refuse to provide this upfront or hide the effective rate, walk away.

Step 5: Check the interest rate against legal ceilings (if applicable)

While there is no longer a general usury ceiling for commercial loans, the following still apply:

For loans below ₱500,000 granted by unlicensed lenders, criminal usury may still be invoked in extreme cases.
SEC-registered lending companies are prohibited from charging excessive or unconscionable rates. Rates above 6% per month are often scrutinized.
Pawnshops are capped at 2–3% per month under PD 114.

Step 6: Verify physical office and contact details

Legitimate SEC-registered lending companies must have a registered physical office address in the Philippines.
Call the landline number listed in SEC records.
Many illegal apps only provide mobile numbers or Facebook pages.

Step 7: Check Data Privacy Commission (NPC) registration

All lenders collecting personal data must be registered with the National Privacy Commission.
Search at https://www.privacy.gov.ph/data-privacy-registration/

III. Common Red Flags of Illegal or Predatory Lenders

Demands upfront processing, insurance, or “guarantee” fees before releasing the loan
Requires access to contacts, photos, or messages in the phone (common in illegal loan apps)
Uses harassment, public shaming, or threats in collection
Advertises “No collateral, no documents, approved in 5 minutes”
Interest rates of 20–50% per month or more
Not registered with SEC as a lending company (only registered as a generic corporation)
Operated by foreign nationals without Filipino majority ownership (violates foreign ownership restrictions in financing/lending)

IV. What to Do If You Suspect an Illegal Lender

File a complaint with the SEC via:
- Online: https://www.sec.gov.ph/complaints/
- Email: lcfd_md@sec.gov.ph
- Hotline: (02) 8818-CEBU (2328)
File with the National Privacy Commission for data privacy violations: https://privacy.gov.ph/complaint/
File cyber-libel or unjust vexation cases with the PNP Anti-Cybercrime Group if harassed.
File with the BSP if the entity falsely claims to be a bank.
Report the app to Google Play Store or Apple App Store (both now cooperate with SEC takedown requests).

V. Conclusion

The rule is simple: No Certificate of Authority from the SEC = Illegal lender.
Never borrow from any entity that cannot show a valid SEC Certificate of Authority to operate as a lending or financing company. The few minutes it takes to verify on the SEC website can save you from years of debt trap, harassment, and financial ruin.

Always remember: If it seems too good to be true (instant approval, no documents, very high loan amounts), it almost certainly is illegal.

Borrow only from SEC-registered lending companies, BSP-supervised banks, or government institutions such as SSS, GSIS, or Pag-IBIG Fund.

Your financial safety depends on your diligence in verification.