Below is a comprehensive discussion on the topic of Online Lending Harassment and Excessive Fees in the Philippine context. This overview covers the relevant laws, regulations, common practices, potential abuses, and possible remedies available to individuals who have experienced harassment from online lending platforms or suffered from exorbitant fees.

1. Introduction

The growth of online lending platforms (often referred to as “online lending apps” or “fintech lenders”) in the Philippines has provided many Filipinos with fast and convenient access to credit. Despite these benefits, there have been increasing reports of unfair debt collection practices—ranging from harassment to cyber-libelous behavior—and concerns about exorbitant and hidden fees. Various government agencies, particularly the Securities and Exchange Commission (SEC) and the National Privacy Commission (NPC), have released guidelines to protect borrowers. Understanding the regulatory framework, the nature of possible violations, and legal remedies is crucial for borrowers seeking redress.

2. Regulatory Framework Governing Online Lending

2.1. Securities and Exchange Commission (SEC)

Lending Company Regulation Act of 2007 (Republic Act No. 9474)
- Governs the establishment, operation, and regulation of lending companies in the Philippines.
- Requires lending entities to secure a Certificate of Authority to Operate from the SEC.
- Provides certain borrower protections, particularly concerning interest rates and disclosure.
SEC Memorandum Circulars
- SEC Memorandum Circular No. 18, Series of 2019 (and subsequent circulars):
  - Issued to address unfair debt collection practices, especially for financing and lending companies.
  - Prohibits acts of harassment, threats, misuse of personal information, and other unethical collection methods.
  - Mandates strict compliance with the Data Privacy Act of 2012 and the rules of the SEC regarding the protection of consumers.
Interest Rate Regulations
- The SEC and Bangko Sentral ng Pilipinas (BSP) have the authority to impose ceilings on interest rates and fees for lending companies and financial institutions. Although the BSP typically focuses on banks and financial intermediaries, the SEC’s role in regulating non-bank lenders continues to evolve.

2.2. Data Privacy Commission (NPC)

Data Privacy Act of 2012 (Republic Act No. 10173)
- Protects personal information collected by any entity.
- Prohibits unauthorized or excessive collection, usage, or distribution of personal data.
- Has been invoked where online lending apps are found to have improperly accessed the borrower’s phone contacts or employed “shaming” tactics via social media.

2.3. Revised Penal Code (RPC) and Related Laws

Harassment and Threats
- Certain collection methods (e.g., threats of harm or defamatory language) may violate the Revised Penal Code provisions on grave threats, slander, or libel.
- Additionally, the Cybercrime Prevention Act of 2012 (Republic Act No. 10175) can apply if threats or defamatory statements are transmitted through digital means.
Usury Law (Act No. 2655, as amended)
- While strict usury ceilings have been generally removed (with interest rates effectively deregulated), courts can still declare interest rates to be unconscionable when they are exorbitant.

3. Common Types of Harassment by Online Lending Platforms

Unauthorized Access to Contacts and “Shaming”
- Some online lending apps require intrusive permissions and subsequently use the borrower’s contact list to message or call relatives, friends, or employers about the borrower’s debt.
- This practice can constitute unauthorized processing of personal information under the Data Privacy Act.
Threatening Messages and Calls
- Lenders may send text messages or place calls threatening legal action or arrest. These may qualify as grave threats or unfair debt collection practices prohibited under SEC regulations.
Public Shaming through Social Media
- Lenders have been reported to create social media groups or posts publicly accusing borrowers of being delinquent, sometimes attaching personal details or altered photos.
- This can potentially violate libel laws, the Data Privacy Act, as well as the SEC’s prohibitions on harassment.
Repeated and Excessive Calls
- Persistently calling the borrower’s phone, employer, or relatives can amount to harassment, especially if the frequency is high and the calls occur at unreasonable hours or use offensive language.

4. Excessive Fees and Unconscionable Interest Rates

4.1. Hidden and Add-On Fees

Some online lenders charge various fees beyond the stated interest rate (e.g., processing fees, administrative fees, etc.).
Borrowers who do not read the fine print might discover that the total cost of borrowing is significantly higher.

4.2. Short Repayment Terms with High Penalties

Online lending platforms sometimes offer very short repayment periods (e.g., 7 to 14 days), imposing substantial penalties for late payment.
When added to the base interest, the overall Annual Percentage Rate (APR) can become astronomical.

4.3. Legal Perspective on Unconscionable Rates

Philippine jurisprudence has recognized that while interest rate ceilings have been liberalized, courts can still intervene if the rate or penalties are unconscionable.
Borrowers can contest such rates in court, and judges often use equitable grounds to reduce excessively high charges.

5. Legal Remedies and Enforcement Actions

5.1. Filing a Complaint with the SEC

Grounds: Harassment, threats, unauthorized disclosure of personal data, and other violations of SEC rules.
Procedure: The borrower can submit a formal complaint, along with evidence (e.g., screenshots, call recordings, text messages) to the Enforcement and Investor Protection Department (EIPD) of the SEC.
Possible Outcomes: The SEC can impose fines, suspend or revoke the lender’s license, and refer criminal cases to the Department of Justice.

5.2. Filing a Complaint with the National Privacy Commission

Grounds: Violation of the Data Privacy Act (e.g., unauthorized access to contacts, misuse of borrower’s personal data).
Procedure: File a complaint directly through the NPC’s website or office. Submit any relevant documentation of privacy violations.
Possible Outcomes: The NPC can impose penalties and require the lending company to cease unlawful processing. In some instances, it coordinates with the SEC for joint investigations.

5.3. Criminal and Civil Actions

Criminal Case under the RPC or Cybercrime Law
- If the harassment involves threats or defamatory statements, the borrower may file a complaint for grave threats, libel, or cyber-libel with law enforcement agencies (e.g., the PNP or NBI).
Civil Case for Damages
- Borrowers may sue for moral and exemplary damages under the Civil Code if they suffer harm (e.g., reputational harm or emotional distress) from harassment or public shaming.
Court Declaration of Unconscionable Rates
- If interest rates and fees are deemed unconscionable, the borrower can ask the courts to reduce them to a fair amount.

6. Government Actions and Enforcement Trends

SEC Crackdowns
- The SEC has repeatedly warned and sanctioned online lending companies that engage in harassment and have failed to comply with registration requirements.
- Periodic public advisories are issued listing unauthorized or illegal lenders.
NPC Investigations
- The National Privacy Commission has conducted raids and investigations into apps that violate data privacy regulations, sometimes leading to app takedowns.
Public Awareness Campaigns
- Both the SEC and NPC encourage the public to report abusive lending practices.
- NGOs, consumer groups, and some legislators push for stricter regulations and heavier penalties for rogue lenders.

7. Practical Tips for Borrowers

Check for SEC Registration
- Before borrowing, verify whether the lender is registered with the SEC and has the requisite Certificate of Authority to Operate.
Read the Terms and Conditions Carefully
- Look for clauses on interest rates, processing fees, administrative fees, and penalties for late payment or default.
Secure Evidence of Harassment
- Save screenshots, text messages, or call recordings. Document any unusual access to your phone’s contacts or social media.
Know Your Rights Under the Data Privacy Act
- The lender must obtain your consent for any use of your personal data beyond what is strictly necessary for loan processing.
Report Abuses Promptly
- File complaints with the SEC and NPC if you experience or witness any prohibited acts. Quick reporting helps these agencies take prompt action.

8. Conclusion

Online lending has revolutionized access to credit in the Philippines, yet it has also opened the door to predatory practices, harassment, and excessive fee structures. The government, through the SEC and NPC, is increasingly vigilant in enforcing regulations against unscrupulous lenders. Borrowers have several legal avenues for redress, from administrative complaints to criminal and civil actions. To safeguard themselves, prospective borrowers should exercise due diligence—research the lender’s background, scrutinize contracts, and be aware of the laws and regulations designed to protect them from harassment and unjust charges.

Ultimately, while online lending offers convenience and immediate liquidity, it should be approached cautiously. Knowing one’s rights and remedies is the key to securing fair treatment and avoiding the pitfalls of lending harassment and excessive fees.

Disclaimer

This overview is provided for general informational purposes and does not constitute legal advice. For specific concerns or cases, it is advisable to consult a qualified attorney or approach the relevant government agencies (e.g., the Securities and Exchange Commission and the National Privacy Commission) for accurate, up-to-date guidance.