In the digital age, Fintech has revolutionized access to credit in the Philippines. However, this convenience has a dark side: the rise of predatory Online Lending Apps (OLAs) that employ aggressive and illegal collection tactics—often starting well before a loan is even due.
If you or someone you know is facing threats, shaming, or incessant calls from an OLA before the deadline, it is crucial to understand that the law is on your side.
1. The Pre-Due Date Harassment Tactic
While legitimate lenders send polite reminders, "predatory" OLAs often initiate high-pressure tactics days before the maturity date. Common illegal practices include:
- Persistent Calling/Texting: Bombarding the borrower and their contacts with messages at unreasonable hours.
- Contact List Access: Using permissions granted during app installation to message your friends, family, or employers about your debt.
- Threats of Legal Action: Falsely claiming that "Sheriffs" or "NBI agents" are on their way to your house to arrest you (a civil debt is not a criminal case for imprisonment).
- Social Shaming: Threatening to post your photo or "wanted" posters on social media to humiliate you into paying.
2. Governing Laws and Regulations
The Philippines has established clear boundaries to protect borrowers from these abuses:
- SEC Memorandum Circular No. 18 (Series of 2019): This is the primary regulation governing "Prohibition on Unfair Debt Collection Practices." It explicitly forbids the use of threats, insults, and the disclosure of a borrower's debt to third parties.
- Data Privacy Act of 2012 (RA 10173): Accessing your phone’s contact list to harass people who are not co-makers or guarantors is a severe violation of data privacy.
- Cybercrime Prevention Act of 2012 (RA 10175): Tactics involving online libel, threats, and harassment fall under this law.
- Revised Penal Code: Harassment may constitute "Grave Coercion" or "Unjust Vexation."
3. Is Harassment Before the Due Date Legal?
No. Under SEC guidelines, debt collection must be conducted with "honesty, good faith, and fairness." Threatening or harassing a borrower—especially before a default has even occurred—is a clear violation of fair collection standards.
Important Note: In the Philippines, no one can be imprisoned for non-payment of a debt (Art. III, Sec. 20, 1987 Constitution). Any OLA representative claiming you will go to jail for the loan itself is committing fraudulent misrepresentation.
4. Legal Remedies and Steps to Take
If you are being harassed, do not panic. Follow these steps to build your case:
- Document Everything: Take screenshots of all threatening texts, emails, and social media posts. Record phone calls if possible.
- Stop Communicating via Informal Channels: Do not engage in a shouting match. State once that you are aware of your rights and will only communicate through official, legal channels.
- Check the SEC Registry: Verify if the OLA is a registered Lending Company or Financing Company. Many predatory apps operate illegally without a license.
- File a Formal Complaint:
- SEC (Securities and Exchange Commission): Submit a complaint to the Corporate Governance and Finance Department (CGFD) via their online portal or email (
cgfd_enforcement@sec.gov.ph). - NPC (National Privacy Commission): If they accessed your contacts or shamed you online, file a "Privacy Complaint."
- PNP Anti-Cybercrime Group (ACG): For threats and severe online harassment.
5. Can You Refuse to Pay?
While the legal obligation to pay the principal loan remains, the harassment may provide grounds for administrative sanctions against the company. In many cases, the SEC has revoked the "Certificate of Authority" of OLAs found guilty of these practices, effectively shutting them down.
Summary Table: Fair vs. Unfair Practices
| Practice | Legitimate (Fair) | Illegal (Unfair) |
|---|---|---|
| Contact Timing | 6:00 AM to 10:00 PM | Any time, especially late night/early morning |
| Third-Party Contact | Only with consent/guarantors | Contacting your entire phonebook/employer |
| Tone | Professional and polite | Threatening, profane, or insulting |
| Legal Threats | Formal demand letters | Threats of "immediate arrest" or "police raids" |
Final Thought
Online lending is a contract, not a surrender of your human rights. Harassment before a due date is a desperate tactic used by fly-by-night operators to bypass due process. By standing your ground and reporting these entities to the SEC and NPC, you protect not only yourself but other potential victims.
Would you like me to draft a formal demand letter or a complaint template that you can send to the SEC or the lending company's compliance officer?