The rapid rise of online lending applications (commonly called “loan apps”) in the Philippines has provided millions of Filipinos with quick access to credit, often without collateral or stringent credit checks. However, when borrowers default, many of these lenders resort to aggressive, humiliating, and sometimes clearly illegal debt collection practices. This article comprehensively discusses the current legal landscape as of November 2025, the specific practices that cross into criminal territory, available remedies, and practical steps for affected borrowers.

1. Regulatory Framework Governing Online Lending Companies

Online lending platforms are classified as “lending companies” or “financing companies” under Republic Act No. 9474 (Lending Company Regulation Act) and its IRR, and are primarily supervised by the Securities and Exchange Commission (SEC).

Key regulations:

SEC Memorandum Circular No. 18, series of 2019 (as amended) – Rules and Regulations Governing Online Lending Platforms (OLPs)
SEC MC No. 3, s. 2023 – Further amendments on disclosure, data privacy, and debt collection
Mandatory registration with the SEC; unregistered apps operate illegally
Interest rates: While the Supreme Court has upheld the removal of interest rate ceilings for lending companies (as long as not usurious under Art. 1175 and 1957 of the Civil Code), effective rates of 10–30% per month (120–360% per annum) are common and often challenged as unconscionable
Lending companies are explicitly prohibited from engaging in unfair debt collection practices under SEC rules and the Lending Company Regulation Act.

2. What Constitutes Illegal Debt Collection in the Philippines

The following acts committed by online lenders or their collectors are criminal or actionable:

A. Grave Threats (Art. 282, Revised Penal Code)

Threatening to kill the borrower or family members.
Penalty: Arresto mayor (1 month–6 months) up to prision correccional (6 months–6 years) depending on the gravity.

B. Light Threats (Art. 283, RPC)

Threats of physical harm short of killing, or threats to inflict serious harm (e.g., acid attack, rape threats).
Penalty: Arresto menor or fine.

C. Grave Coercion (Art. 286, RPC)

Forcing the borrower to do something against his will through violence or intimidation (e.g., “pay now or we post your photo”).

D. Unjust Vexation (Art. 287, RPC)

Most commonly used charge: annoying, humiliating, or harassing conduct that does not fall under threats or coercion (mass texting, calling at odd hours, shaming).

E. Violation of Republic Act No. 10175 (Cybercrime Prevention Act)

Use of ICT to commit libel (online shaming, posting “wanted” posters on Facebook)
Cyberlibel is now punishable by prision mayor (6–12 years) after the 2022 Supreme Court ruling in Disini v. Secretary of Justice clarified that online libel is covered.

F. Violation of Republic Act No. 9995 (Anti-Photo and Video Voyeurism Act)

Circulating nude or morphed photos of the borrower.

G. Violation of Republic Act No. 10173 (Data Privacy Act of 2012)

Disclosing personal data (contact lists, photos, ID numbers) to third parties without consent. The National Privacy Commission (NPC) has imposed fines of up to ₱3,000,000 on erring lending apps.

H. Violation of SEC Rules on Unfair Collection Practices

SEC MC No. 18, s. 2019, Section 9 expressly prohibits:

Use of obscenities or profane language
Disclosure of the debt to third parties (including posting on social media)
Contacting the borrower at unreasonable hours (10:00 p.m.–6:00 a.m.)
Contacting friends, relatives, or employers to shame the borrower
Threatening to file criminal cases that have no basis (e.g., estafa when there is no deceit)

Violators may have their Certificate of Authority suspended or revoked, and officers face fines of ₱50,000–₱2,000,000 or imprisonment of 6 months to 10 years (Sec. 14, RA 9474).

3. Common Illegal Tactics Used by Online Lenders (2023–2025)

Mass messaging or calling all contacts saved on the borrower’s phone with messages like “Your friend [Name] is a scammer and deadbeat”
Creating “shaming” posters with the borrower’s photo, ID, and captions such as “WANTED: Professional Scammer”
Morphing nude photos or threatening to circulate private photos
Threatening to file estafa or BP 22 cases even when the loan is purely civil in nature
Hacking or threatening to hack social media accounts
Filing multiple fake criminal complaints in different provinces to harass the borrower

4. Is the Unpaid Loan Itself Criminal?

In almost all cases involving legitimate online lending apps: NO.

Philippine jurisprudence is settled:

Purely civil debt arising from a loan contract does not give rise to estafa through deceit (Art. 315, 1(b), RPC) if the borrower genuinely intended to pay at the time of borrowing (People v. Lizada, G.R. No. 144829, 2003; Alferez v. People, G.R. No. 231776, 2022).
Post-dated checks issued as collateral or guarantee (not as payment for a pre-existing obligation) do not trigger B.P. 22 or estafa if dishonored (Llamado v. CA, G.R. No. 84818, 1989; updated in Magaling v. People, G.R. No. 255766, 2023).

Only when there is clear proof of deceit from the very beginning (e.g., using fake IDs, fake payslips, or simultaneous borrowing from 50 apps with no intention to pay) may estafa be viable — but this is the exception, not the rule.

5. Remedies Available to Victims

A. Criminal Complaints (File at Prosecutor’s Office or Directly in Court)

Grave/light threats, unjust vexation, grave coercion, cyberlibel, violation of Anti-Voyeurism Act
No need for a lawyer for initial filing; inquest possible if there is imminent danger

B. Administrative Complaint with SEC

Leads to suspension or revocation of the lender’s authority
SEC has permanently revoked over 2,000 online lending apps as of 2024

C. Data Privacy Complaint with National Privacy Commission (NPC)

NPC can impose multimillion-peso fines and order takedown of posts

D. Civil Case for Damages

Moral and exemplary damages for humiliation and besmirched reputation (Art. 19, 20, 21, 2217, 2219 Civil Code)
Awards commonly range from ₱50,000 to ₱500,000 depending on the gravity (recent 2024 RTC decisions in Quezon City and Pasig)

E. Injunction / TRO

RTC can issue a temporary restraining order prohibiting the lender from further contacting or posting about the borrower

6. Practical Steps When You Are Being Harassed

Do NOT pay under duress just to make the harassment stop without documentation.
Screenshot everything (threats, shaming posts, messages to contacts).
File a police blotter immediately for documentation.
File criminal complaints within reasonable time (prescriptive periods: 1 year for light offenses, 12–20 years for cyberlibel).
Report the app to SEC Online Lending Complaints Desk (sec.gov.ph/online-lending-complaints) and NPC (privacy.gov.ph).
If the app is unregistered, file syndicated estafa against the owners (because operating without SEC authority is a syndicate crime under PDIC and SEC rulings).

7. Current Trends and Enforcement (2023–2025)

The SEC, in coordination with the NBI and PNP Anti-Cybercrime Group, has conducted multiple raids on collection offices (mostly operated by Chinese nationals) in Pasay, Makati, and Pampanga.
Over 1,500 foreign nationals have been deported since 2022 for involvement in illegal lending and collection.
The Supreme Court in 2024 upheld the validity of SEC’s regulatory power over OLPs and clarified that collection agents may be held individually criminally liable even if the lending company is foreign-registered.

Conclusion

Defaulting on an online loan is a civil matter. Lenders have the right to demand payment and file a collection case, but they have absolutely no right to threaten, shame, or harass borrowers and their families. Almost all of the terror tactics employed by rogue online lenders constitute separate criminal offenses punishable by imprisonment.

Borrowers who are victims of these practices should immediately document the harassment and file the appropriate criminal, administrative, and civil actions. The full force of Philippine law — from the Revised Penal Code to the Cybercrime Act and Data Privacy Act — is on the side of the harassed borrower.