Harassment by Online Lending Apps in the Philippines: Legal Protections and Remedies

Is it legal for online lending apps to harass borrowers and their contacts?

In the Philippines, harassment by online lending apps is strictly prohibited by law. The Financial Consumer Protection Act (Republic Act No. 11765) and the Data Privacy Act of 2012 (Republic Act No. 10173) are key laws that protect borrowers from abusive and unfair debt collection practices, including the harassment of borrowers and their contacts. Here’s an overview of the legal protections and remedies available to borrowers:

Prohibited Debt Collection Practices

Under the Financial Consumer Protection Act, lending companies are prohibited from engaging in unethical collection practices, such as:

1. Harassment – Collection agents are not allowed to use threatening or abusive language, or cause public humiliation by contacting the borrower’s family, friends, or workplace.
2. Unreasonable Communication – Debt collectors cannot continuously call borrowers, especially at inappropriate hours, to pressure them into paying.
3. Privacy Violations – Lending apps cannot misuse personal information or disclose a borrower’s debt to third parties, such as friends or colleagues, without the borrower’s consent. This violates the Data Privacy Act of 2012, which protects individuals’ personal data from unauthorized access and disclosure.

Violations of Data Privacy

Online lending apps typically collect personal information, including access to contact lists, during the loan application process. If these apps use this information to contact or harass third parties (such as Facebook friends or phone contacts) without consent, they violate the Data Privacy Act. The law entitles individuals to the following rights:

• Right to Consent – Personal data can only be used with the borrower’s explicit consent, and it must be used for lawful purposes, such as legitimate debt collection, not harassment.
• Right to File Complaints – If personal data is misused, borrowers can file complaints with the National Privacy Commission (NPC). Offenders may face penalties for unauthorized disclosure of personal information.

Penalties for Online Lending Apps

The Securities and Exchange Commission (SEC) oversees lending and financing companies in the Philippines. Lending apps found to engage in unfair collection practices or privacy violations may face:

• Suspension or Revocation of License – The SEC can revoke the registration of online lending apps that violate the law.
• Fines and Penalties – Companies engaging in illegal debt collection practices may also be subject to significant fines, depending on the gravity of the offense.
• Civil and Criminal Liabilities – Lenders may face lawsuits for damages arising from unlawful collection practices and data privacy violations.

Recourse for Borrowers

Borrowers who experience harassment from online lending apps have several legal options:

1. File a Complaint with the SEC – Borrowers can report abusive practices to the SEC, which has been actively shutting down lending apps that violate the law.
2. Seek Protection from the National Privacy Commission (NPC) – For data privacy violations, the NPC can investigate complaints and impose sanctions on companies that misuse personal information.
3. Legal Action – Borrowers may also pursue civil or criminal cases for damages or to seek restraining orders against lending companies engaged in harassment.

In summary, borrowers in the Philippines are protected by law from harassment and privacy violations by online lending apps. Both the Financial Consumer Protection Act and the Data Privacy Act provide legal remedies for those affected by abusive debt collection practices.