The rapid rise of online lending applications in the Philippines has provided millions of Filipinos with quick access to credit, particularly the unbanked and underbanked. However, this convenience has been accompanied by widespread reports of predatory practices, exorbitant interest rates, aggressive collection tactics, public shaming, and violations of privacy. In response, Philippine law has established a comprehensive framework to protect borrowers from abusive online lending platforms.

This article consolidates all key legal rights of borrowers under Philippine law as of November 2025, including relevant statutes, regulations, jurisprudence, and enforcement mechanisms.

1. Regulatory Framework Governing Online Lending Apps

Online lending platforms are classified as either lending companies or financing companies and are primarily regulated by the Securities and Exchange Commission (SEC) under:

Republic Act No. 9474 (Lending Company Regulation Act of 2007) and its Implementing Rules and Regulations (IRR)
Republic Act No. 8556 (Financing Company Act of 1998), as amended
SEC Memorandum Circular No. 18, series of 2019 (Guidelines on the Regulation of Online Lending Platforms)
SEC Memorandum Circular No. 3, series of 2022 (Updated Rules on Lending Companies and Online Lending Platforms)

The Bangko Sentral ng Pilipinas (BSP) also exercises supervisory authority over digital banks and certain payment systems, but non-bank online lenders fall squarely under SEC jurisdiction.

Key Requirement: All entities engaged in lending as a regular business must register with the SEC and obtain a Certificate of Authority (CA) to operate. Operating without a CA is illegal and constitutes syndicated estafa under Presidential Decree No. 1689.

Borrowers are strongly advised to verify the lender’s registration on the official SEC website (https://www.sec.gov.ph/lending-companies-and-financing-companies-2/list-of-registered-lending-companies-and-financing-companies/). The SEC regularly publishes lists of suspended, revoked, and blacklisted platforms.

2. Borrower’s Right to Full Disclosure (Truth in Lending Act)

Under Republic Act No. 3765 (Truth in Lending Act) and BSP Circular No. 730, lenders are strictly required to disclose the following before loan approval:

Effective interest rate (computed on a monthly basis)
Total amount to be financed
All fees and charges (processing, notarial, service, penalty, late payment fees, etc.)
Schedule of payments
Total cost of credit

Any hidden charges or failure to disclose renders the undisclosed amount non-demandable. Borrowers may refuse to pay undisclosed fees and may file complaints for violation of RA 3765.

3. Reasonable Interest Rates and Charges

While the Usury Law (Act No. 2655) was effectively suspended by BSP Circular No. 1098 (2020) for unsecured loans, the SEC imposes reasonableness standards:

SEC MC No. 3, s. 2022 caps the maximum effective interest rate at 6% per month (72% per annum) for platforms under its supervision, but the SEC consistently declares rates exceeding 30–40% per annum as unconscionable in enforcement actions.
Penalty charges are capped at 1% per month of the unpaid amount or a maximum of 5% per month on overdue installments.
Processing fees must not exceed 10% of the principal.

Any interest rate or fee deemed “iniquitous, unconscionable, or exorbitant” may be reduced or nullified by courts under Article 1229 and Article 1306 of the Civil Code (contractual freedom subject to public policy).

4. Prohibited Collection Practices

The SEC has explicitly banned the following practices (SEC MC No. 18, s. 2019 and subsequent advisories):

Public shaming or posting borrowers’ photos or personal information on social media
Contacting third parties (family, employer, friends) except for address verification and only after exhausting reasonable efforts to contact the borrower
Using obscene, profane, or threatening language
Calling at unreasonable hours (before 6:00 a.m. or after 10:00 p.m.)
Threatening criminal prosecution for non-payment of a civil debt (except in cases of actual estafa)
Using fake court documents or pretending to be law enforcement officers

These acts constitute unfair debt collection practices under SEC rules and may also violate:

Republic Act No. 10175 (Cybercrime Prevention Act) – online libel, threats, harassment
Republic Act No. 9995 (Anti-Photo and Video Voyeurism Act)
Revised Penal Code Articles 282–287 (grave threats, unjust vexation, grave coercion)

5. Data Privacy Rights

All online lending apps are personal information controllers under Republic Act No. 10173 (Data Privacy Act of 2012) and must comply with the National Privacy Commission (NPC) regulations.

Borrowers have the following rights:

Right to be informed before data is collected
Right to access their personal data
Right to rectification of inaccurate data
Right to erasure/blocking (“right to be forgotten”) after full payment
Right to damages for unauthorized disclosure

Requiring access to contacts, gallery, SMS, or microphone as a condition for loan approval is a grave violation. The NPC has fined and ordered the shutdown of numerous apps for such practices (e.g., NPC Case No. 2021-01 against several lending apps).

Borrowers may file complaints directly with the NPC at complaints@privacy.gov.ph. Violations carry fines up to ₱5,000,000 and imprisonment.

6. Remedies Available to Borrowers

A. Administrative Complaints

File with SEC Enforcement and Investor Protection Department (EIPD) via email (epd@sec.gov.ph) or online portal
SEC can impose fines up to ₱5,000,000, revoke CAs, and order cessation of operations

B. Data Privacy Complaints

National Privacy Commission (complaints@privacy.gov.ph)
NPC can order immediate takedown of apps from Google Play and App Store

C. Criminal Complaints

Philippine National Police Anti-Cybercrime Group (PNP-ACG)
National Bureau of Investigation Cybercrime Division (NBI-CCD)
Charges: online libel, unjust vexation, grave threats, cybercrime, violation of RA 9995

D. Civil Action

Small claims court (up to ₱1,000,000) for refund of overcharges and damages
Regular civil case for moral and exemplary damages (successful cases have awarded ₱100,000–₱500,000 in damages for harassment and shaming)

E. Class Suit

Multiple borrowers may file a class suit against the same lending app

7. Special Protections Under the Financial Consumer Protection Act

Republic Act No. 11765 (Financial Consumer Protection Act of 2022) imposes stricter standards on all financial service providers, including online lenders:

Duty of good faith and fair treatment
Prohibition on abusive, predatory, and deceptive conduct
Mandatory financial education disclosure
BSP and SEC joint enforcement powers

Violations may result in penalties up to three times the financial benefit gained by the lender.

8. Practical Steps for Borrowers Facing Harassment

Document everything (screenshots, call logs, messages).
Send a formal demand letter to the lender citing specific violations.
File simultaneous complaints with SEC, NPC, and PNP-ACG/NBI.
Block the app’s access to contacts and revoke permissions.
Report the app on Google Play/App Store for abusive behavior.
Seek assistance from the Public Attorney’s Office (PAO) for free legal help.

9. Current Enforcement Landscape (as of November 2025)

The SEC has revoked over 500 certificates of authority since 2019 and continues aggressive enforcement. The NPC has caused the removal of more than 1,000 abusive lending apps from app stores. Courts have consistently ruled in favor of harassed borrowers, awarding substantial damages.

Conclusion

Borrowers dealing with online lending apps in the Philippines are not powerless. The law provides robust, multi-layered protection through disclosure requirements, interest rate reasonableness, strict collection prohibitions, data privacy rights, and multiple enforcement avenues. Predatory lenders operate on the assumption that borrowers are unaware of their rights. Knowledge of these rights — and willingness to assert them through formal complaints — is the most effective deterrent against abuse.

Every Filipino borrower is protected by law. Exercise your rights without fear.