The rise of Financial Technology (FinTech) in the Philippines has made credit more accessible, but it has also birthed a predatory industry: illegal Online Lending Applications (OLAs). These entities often operate without proper registration, utilizing usurious interest rates and illegal debt collection practices—including harassment, shaming, and data privacy violations.
If you find yourself victimized by an online lending scam, here is a comprehensive legal guide on how to navigate the situation.
1. Immediate Steps: Secure and Document
Before filing a formal complaint, you must secure all evidence of the transactions and the subsequent harassment.
- Take Screenshots: Save copies of the loan agreement, the amount received, the payment history, and all threatening text messages, emails, or social media posts.
- Do Not Delete the App Yet: Keep the app installed long enough to get the "About" information, developer details, and any terms of service.
- Warn Your Contacts: Illegal OLAs often "harvest" your contact list. Inform your friends and family that your phone may have been compromised and to ignore any messages regarding your alleged debts.
2. Verify the Lender’s Status
Under Philippine law, lending companies must be registered with the Securities and Exchange Commission (SEC). You can check the SEC website for the:
- Certificate of Incorporation
- Certificate of Authority (CA) to operate as a Lending/Financing Company.
Note: Even if a company is registered, they are still prohibited from engaging in unfair debt collection practices under SEC Memorandum Circular No. 18, Series of 2019.
3. Legal Remedies and Where to File Complaints
Depending on the nature of the scam or harassment, you should approach specific government agencies:
A. National Privacy Commission (NPC)
If the lender accessed your contacts without consent, posted your photos on social media, or sent "death threats" to your contacts, they have violated the Data Privacy Act of 2012 (R.A. 10173).
- Action: File a formal complaint for "Unauthorized Processing" and "Malicious Disclosure."
B. Securities and Exchange Commission (SEC)
The SEC’s Corporate Governance and Finance Department (CGFD) handles violations of the Lending Company Regulation Act and unfair debt collection practices.
- Action: Report lenders for lack of authority to operate, hidden charges, or the use of insults and profanity.
C. PNP Anti-Cybercrime Group (PNP-ACG) or NBI Cybercrime Division
If the harassment involves grave threats, blackmail, or identity theft, this falls under the Cybercrime Prevention Act of 2012 (R.A. 10175).
- Action: Visit their offices to file a formal blotter or affidavit.
4. Understanding Your Rights
As a borrower, you are protected by several laws and circulars:
| Law/Regulation | Protection Provided |
|---|---|
| R.A. 3765 (Truth in Lending Act) | Lenders must disclose the full cost of the loan (interest, fees, penalties) in writing before the transaction. |
| SEC MC No. 18 (2019) | Prohibits the use of threats, profane language, and contacting people in your phone book who are not co-makers. |
| Revised Penal Code | Protects you against "Grave Threats" and "Light Coercion" if agents threaten physical harm. |
5. Dealing with Debt Collection Agents
It is important to remember that non-payment of a debt is not a criminal offense (except in cases involving Bouncing Checks/B.P. 22). Under the Philippine Constitution, "No person shall be imprisoned for debt."
While you are still civilly liable for the principal amount you borrowed, you are not legally obligated to pay:
- Unconscionable or "shocking" interest rates (e.g., 50% per week).
- Hidden fees not disclosed in the disclosure statement.
- Penalties resulting from the lender's own illegal practices.
Summary of Action Plan
- Cease Communication: Once you have documented the harassment, stop engaging with the agents.
- Report to SEC/NPC: Use their online complaint portals to flag the app.
- Privacy Lockdown: Set your social media profiles to private and change your SIM card if necessary.
- Seek Legal Counsel: If the amounts are significant or the harassment is severe, consult a lawyer to draft a "Cease and Desist" letter.
Would you like me to draft a template for a formal complaint letter to the National Privacy Commission?