Usurious and Unfair Lending in the Philippines: Where and How to File a Complaint

This is practical legal information for the Philippine setting (not legal advice). It aims to help you spot abusive lending, understand your rights, and choose the right forum for a complaint.

1) The legal landscape—what “usury” means today

There is no fixed interest-rate ceiling. The Usury Law (Act No. 2655) once imposed caps, but these ceilings were suspended by Central Bank Circular No. 905 (1982). That did not give lenders a free pass: Philippine courts have repeatedly struck down unconscionable interest or penalty charges and reduced them to reasonable levels. Two bedrock rules:

Interest must be in writing. Under the Civil Code, no interest is due unless expressly stipulated in writing.
Unconscionable interest/penalties can be voided or reduced. Courts may strike down iniquitous rates and equitably reduce penalties. When courts nullify the rate, they typically apply the legal interest of 6% per annum (per landmark jurisprudence) on amounts due.

Key consumer-protection laws that still bite:

R.A. 3765 (Truth in Lending Act). Requires clear disclosure of the finance charge and key loan terms (no hidden fees).
R.A. 9474 (Lending Company Regulation Act) and R.A. 8556 (Financing Company Act). Registration, conduct, and disclosure rules for lending/financing companies (SEC oversight).
R.A. 10870 (Credit Card Industry Regulation Law). Prohibits unfair collection by card issuers and empowers Bangko Sentral ng Pilipinas (BSP) to regulate charges.
R.A. 11765 (Financial Products and Services Consumer Protection Act, “FCPA”). Strengthens consumer rights, requires lenders to have internal dispute resolution (IDR), and authorizes regulators (BSP, SEC, Insurance Commission) to order restitution, disgorgement, fines, and cease-and-desist against abusive players.
R.A. 10173 (Data Privacy Act). Stops doxxing and contact-list harassment by loan apps; protects borrowers’ personal data.
P.D. 114 (Pawnshop Regulation Act) and BSP rules on pawnbroking; disclosures and charges are regulated.
Cooperative laws (CDA). Credit-giving cooperatives are under the Cooperative Development Authority.
Criminal laws may apply to harassment, threats, libel/cyberlibel, grave coercions, or access-device abuses (e.g., forcing you to surrender your ATM card and PIN can implicate R.A. 8484).

2) What counts as unfair or abusive lending/collection?

Think in two buckets:

A. Substantive unfairness (the terms)

Sky-high interest or “processing fees” that function like hidden interest.
Stacked penalties (late charges on top of already usurious rates).
“Take my ATM card and PIN” / “Sangla-ATM” arrangements.
Blank checks or pre-signed deeds of sale as “security.”

B. Conduct unfairness (the behavior)

Threats of violence, doxxing, shaming posts, contacting your employer or relatives, or blasting your contact list.
Calling at odd hours or repeatedly after being told to stop.
Misrepresenting legal remedies (e.g., “we’ll imprison you for unpaid debt”—nonpayment of debt is not a crime in the Philippines; separate crimes like B.P. 22 or estafa have their own elements).

Red flags: insistence on accessing your phone contacts; pressure to sign blank forms; refusal to give a copy of the contract; withholding a large “fee” from the loan proceeds; or instructing you to issue a check you cannot fund.

3) Who regulates my lender? (Choose the proper forum)

Identify the type of lender first—this determines where you complain:

Lender/Transaction	Primary Regulator
Banks, thrift/rural banks, e-money issuers, pawnshops	BSP
Lending or Financing Companies (including online lending apps/OLPs)	SEC
Insurance/Pre-need/HMOs (when “loans” are tied to these)	Insurance Commission (IC)
Cooperatives that issue member loans	Cooperative Development Authority (CDA)
Individuals or unregistered “5-6” operators	SEC (for illegal lending business), plus Barangay/Courts for civil disputes, and PNP/NBI/Prosecutor for crimes
Data privacy abuses (doxxing, scraping contacts, shaming)	National Privacy Commission (NPC)

You can (and often should) pursue parallel tracks: e.g., complain to SEC for abusive collection and to NPC for doxxing—plus court action to nullify unconscionable interest.

4) Where and how to file a complaint

Step 0 — Document everything

Government ID; loan contract; receipts/transfer proofs; screenshots of app pages, calls, texts, emails, chat threads; notice/demand letters; ledger or spreadsheet of charges/interest/fees; any proof of harassment (social media posts, caller IDs, timestamps).
Do not illegally record calls. The Anti-Wiretapping Act (R.A. 4200) generally prohibits recording private communications without required consent.

Step 1 — Use the lender’s Internal Dispute Resolution (IDR)

Under the FCPA, regulated lenders must have consumer assistance/complaints desks and written IDR procedures.
File a concise written complaint (email and/or registered mail): identify the account, state the facts, what rules are breached (e.g., unfair collection, non-disclosure, unconscionable rates), and what you want (rate reduction, fee refund, stop harassment, data deletion, correction of records).
Keep the ticket/reference number and proof of submission. If unresolved or the response is unsatisfactory/late, escalate to the regulator below.

Step 2 — Escalate to the right regulator(s)

A) BSP (banks, EMI, pawnshops, credit cards)

Grounds: excessive/undisclosed charges; unfair collection; violations of disclosure/credit-card rules; pawnshop irregularities.
What to submit: ID; account details; your complaint to the bank and its response; contracts/receipts; computation showing disputed charges; call/chat logs.
Remedies: BSP can direct corrective action, order restitution, and penalize supervised institutions.

B) SEC (lending/financing companies and online lending apps)

Grounds: operating without SEC registration; non-compliance with disclosure; unfair debt collection (e.g., threats, contacting people in your phonebook, public shaming); abusive interest/penalty structures; other violations.
What to submit: ID; screenshots of app and communications; proof of registration status if available; contract; proof of payments; your IDR attempt.
Remedies: cease-and-desist orders, suspension/revocation, fines, and orders to refund/rectify—plus referral for prosecution where appropriate.

C) NPC (data privacy violations)

Grounds: scraping and misusing your contacts, doxxing, disclosure of your debt to third parties without lawful basis, failure to secure personal data.
What to submit: evidence of unlawful processing/disclosure; your letter to the lender demanding cessation and data deletion; proof of harm.
Remedies: compliance orders, penalties, data-deletion directives, and enforcement action.

D) CDA (cooperatives)

Grounds: abusive collection, non-disclosure, over-penalizing within co-op loans, violation of by-laws or cooperative rules.
What to submit: co-op membership/loan documents; receipts; your IDR effort; board/grievance proceedings (if any).

E) IC (insurance/plan-linked finance)

Grounds: when “loans” are tied to insurance/HMO/pre-need products.

F) Criminal complaints: PNP/NBI or City/Provincial Prosecutor

For threats, grave coercions, libel/cyberlibel, extortion, or access-device offenses (e.g., seizing your ATM and withdrawing wages).
What to submit: affidavits, screenshots, witnesses, and any digital forensics you can preserve (URLs, timestamps, headers).

G) Barangay/Katarungang Pambarangay (civil disputes with individual lenders in the same city/municipality)

Often a pre-condition before filing a civil suit if both parties are individuals living/working in the same locality. Corporations are generally not covered.
Outcome: settlement, or a Certificate to File Action if no settlement.

H) Courts (Small Claims/MTC/RTC)

Small Claims is designed for quick money claims within the current Supreme Court threshold (recently raised; check the latest amount). Lawyers are not required.
Typical civil relief: (1) declare interest/penalties void or unconscionable, (2) recompute at the legal interest (6% p.a.), (3) order refunds, (4) damages for abusive practices, and (5) injunctions against harassment.
You can also defend against a lender’s collection case by challenging unconscionable interest and illegal fees.

5) How to build and present your case

A) Show the real (effective) cost of the loan

Abusive lenders hide interest in “processing” or “service” fees deducted upfront. Compute the effective interest based on what you actually received (net of withheld fees), not just the face amount.

Example: You signed for ₱10,000 payable in 30 days, but ₱1,000 was withheld as a “fee.” You actually received ₱9,000 and had to pay back ₱12,000 (principal + ₱2,000 “interest/fees”). Your effective one-month charge is ₱2,000 on ₱9,000 → about 22.2% for one month—an indicator of possible unconscionability when annualized.

Attach a simple table: date, amount released (net), amounts paid, fees, and your computation.

B) Evidence of unfair collection

Screenshot or export call logs, SMS/OTT chats, social-media posts, and voicemail.
Note dates, times, numbers used, and the exact words (threats, shaming, contacting your employer).
Ask the lender in writing to stop unlawful conduct; demand data deletion where appropriate.

C) Keep the process clean

Use registered mail or courier and capture proof of receipt.
Keep a case timeline (submission dates, responses, follow-ups).
Never surrender your ID, ATM card, PIN, or phone as “security.” No property may be taken without due process of law.

6) Templates (you can adapt these)

A) IDR/Regulator Complaint (core body)

Subject: Complaint re [Account No./Loan App/Date] – Unfair Lending/Collection
Parties/Account: Your name, contact; lender name, app name, account number/loan ID
Facts: When the loan was released, terms promised vs. terms applied, what fees/penalties were charged, what conduct occurred (dates, exact statements).
Violations: Truth in Lending (non-disclosure), FCPA (unfair conduct), SEC/BSP rules (as applicable), Data Privacy Act (if doxxing/contacts were used), unconscionable interest under the Civil Code.
Relief sought: Stop harassment; correct billing; void or reduce interest/penalties; apply 6% p.a. legal rate prospectively; refund illegal fees; delete personal data unlawfully processed; damages.
Attachments: Contract, IDs, payment proofs, screenshots, your computation, your prior IDR letter and the lender’s reply (if any).

B) Barangay Complaint (individual moneylender)

Short narration of the debt and abusive terms/conduct; attach receipts; propose a settlement (e.g., reasonable interest/penalty reduction and payment schedule).

C) Court (Small Claims) – Statement of Claim (outline)

Parties and addresses; cause of action (sum of money with reconputation); attach documentary evidence; prayer for reduction/voiding of interest and penalties, application of legal interest, and damages/refund.

7) Special scenarios

Online Lending App (“OLP”) harassed your contacts. File (1) SEC complaint for unfair collection; (2) NPC complaint for unlawful processing/disclosure; (3) consider criminal complaint for threats or libel if statements were defamatory. Seek data deletion and account correction.
“5-6” operator with motorcycles collecting daily. If unregistered, report to SEC and local police (harassment). Use Barangay for civil settlement and, if needed, Small Claims to declare and reduce unconscionable interest.
Credit card charges exploded after a missed payment. Complain to the bank’s IDR, then BSP if unresolved, citing disclosure failures/unfair penalty stacking and asking for a recomputation consistent with rules and jurisprudence.
Pawnshop dispute. Check the pawn ticket disclosures. Complain to the pawnshop then BSP if terms or fees deviate from regulatory requirements.

8) Frequently asked questions

Is a high rate automatically illegal? No fixed cap exists, but courts can strike unconscionable rates and penalties and apply the 6% p.a. legal interest instead.

Can a lender send me to jail for not paying? No. Nonpayment of debt is a civil matter. Separate crimes (e.g., B.P. 22 for bouncing checks, or estafa for deceit) have distinct elements that must be proven.

Can they take my ID/phone/ATM as collateral? They should not. Coercing surrender of your ATM/PIN or confiscating personal property can trigger administrative liability and even criminal laws.

They keep calling my boss and family. Is that allowed? Generally no. Harassment and public shaming are prohibited by sector rules and the Data Privacy Act. Document it and complain to the appropriate regulator(s).

Do I need a lawyer? Not for IDR, regulator complaints, Barangay, or Small Claims (lawyers aren’t required there), but legal counsel is valuable for larger civil cases or when facing criminal issues.

Are there interest caps anywhere? Some specific products (e.g., credit cards, certain short-term small-value loans, and pawn transactions) are subject to regulatory limits and fee rules set by BSP or SEC. These caps and circulars change—ask the regulator or check the latest circular when you file.

9) Quick decision guide

Identify the lender. Bank/pawnshop → BSP. Lending/financing/loan app → SEC. Cooperative → CDA. Insurance-linked → IC. Data abuse/doxxing → NPC. Crimes (threats/libel/extortion) → PNP/NBI/Prosecutor.
File with the lender’s IDR (keep the ticket).
Escalate to the regulator with your evidence.
Barangay if your opponent is an individual in the same city/municipality.
Small Claims/Court to void or reduce interest/penalties, claim refunds/damages, or defend against collection suits.

10) Final tips

Everything in writing. Confirm phone talks by email.
Compute the effective rate. Hidden fees that reduce your take-home cash can make “low” stated rates unconscionable.
Preserve evidence (screenshots, envelopes, registry receipts).
No illegal recordings.
Parallel remedies are okay (e.g., SEC + NPC + court).
Be precise in your ask. Tell the regulator exactly what you want (rate reduced, penalties voided, refund, data deletion, cease harassment).

If you want, I can tailor a filled-out complaint draft for your specific lender (bank, OLP, co-op, pawnshop) using your facts and attachments, plus a simple recomputation worksheet you can submit with it.