The proliferation of Online Lending Applications (OLAs) in the Philippines has brought financial inclusion to the unbanked, but it has also birthed a crisis of "cyber-harassment" and "debt-shaming." To address these abuses, the Philippine government, through the Securities and Exchange Commission (SEC) and the National Privacy Commission (NPC), has established a robust legal framework to protect borrowers from predatory practices.
I. Governing Regulations
The primary regulations governing the conduct of OLAs include:
- SEC Memorandum Circular No. 18, Series of 2019: Explicitly prohibits unfair debt collection practices.
- Republic Act No. 10173 (Data Privacy Act of 2012): Governs the processing of personal data and prohibits unauthorized access to contact lists and galleries.
- Republic Act No. 11765 (Financial Products and Services Consumer Protection Act): Strengthens the power of regulators to penalize financial service providers for unfair and deceptive practices.
- Republic Act No. 10175 (Cybercrime Prevention Act of 2012): Relevant in cases of online libel and identity theft.
II. Prohibited Collection Practices
Under SEC MC No. 18 (2019), lending and financing companies are strictly prohibited from engaging in the following acts:
- Threats of Violence or Physical Harm: Using or threatening to use physical force against the borrower, their reputation, or their property.
- Use of Profane or Abusive Language: Employing insults, obscenities, or "street-slang" intended to humiliate the borrower.
- Disclosure of Debt to Third Parties: Contacting people in the borrower’s contact list who are not co-makers or guarantors, or posting the borrower’s name and debt status on social media (debt-shaming).
- False Representations: Claiming to be a lawyer, a court official, or a government agent; or threatening legal action that cannot legally be taken (e.g., claiming the borrower will go to "debtor's prison," which is prohibited by the Constitution).
- Contacting Borrowers at Unreasonable Hours: Contacting the borrower before 6:00 AM or after 10:00 PM, unless the debt is more than 60 days past due or the borrower has given express consent.
- Deceptive Practices: Using "shame" tactics such as sending funeral wreaths or coffins to the borrower’s address or making repeated, harassing phone calls to the borrower’s workplace.
III. Data Privacy Violations
The National Privacy Commission (NPC) has identified specific technological abuses unique to OLAs:
- Contact List Harvesting: Many OLAs require "permissions" to access a phone's contact list, gallery, and social media accounts as a condition for the loan. Using this data to harass the borrower’s friends and family is a criminal violation of the Data Privacy Act.
- Unauthorized Processing: Using personal information for purposes other than what was disclosed (e.g., using a selfie for a "Wanted" poster) constitutes "processing for unauthorized purposes."
IV. Remedies for Borrowers
Borrowers victimized by OLA harassment have several legal avenues for redress:
1. Administrative Complaint (SEC)
The SEC's Corporate Governance and Finance Department (CGFD) handles complaints against OLAs. If an OLA is found guilty of unfair collection practices, the SEC can:
- Impose fines ranging from ₱25,000 to ₱1,000,000.
- Suspend or revoke the OLA’s Certificate of Authority (CA) to operate.
2. Privacy Complaint (NPC)
If the harassment involves the misuse of personal data or contact lists, a complaint may be filed with the NPC for violations of the Data Privacy Act. This can lead to cease-and-desist orders and criminal prosecution of the company's directors.
3. Criminal Prosecution
In extreme cases involving threats, coercion, or libel, the borrower may file criminal charges through the Philippine National Police (PNP) Anti-Cybercrime Group or the National Bureau of Investigation (NBI).
V. Summary of Legal Protections
| Type of Abuse | Legal Basis | Regulatory Body |
|---|---|---|
| Harassment/Threats | SEC MC No. 18, s. 2019 | SEC |
| Social Media Shaming | Cybercrime Prevention Act / Libel | PNP / NBI / Courts |
| Contact List Access | Data Privacy Act of 2012 | NPC |
| Excessive Interest/Fees | Truth in Lending Act | SEC / BSP |
Note on Non-Imprisonment for Debt: Article III, Section 20 of the 1987 Philippine Constitution states: "No person shall be imprisoned for debt or non-payment of a poll tax." While an OLA can sue for civil collection of a sum of money, they cannot threaten a borrower with jail time for the mere inability to pay a debt.