Disclaimer: The information contained in this article is provided for general informational purposes only and does not constitute legal advice. Laws and regulations may change over time, and their application can vary depending on the specific facts and circumstances. For legal advice concerning your particular situation, consult a qualified attorney in the Philippines.

How to Respond to Harassing Practices and High Interest by Online Lenders in the Philippines

Online lending platforms have proliferated in the Philippines over the past several years. While many lenders offer legitimate services, others resort to abusive collection practices, harassing borrowers or imposing exorbitant interest rates. If you are caught in such a situation, it is important to know your rights and the legal framework that protects you. This article aims to provide a comprehensive overview of the relevant laws, the authorities involved, and practical steps you can take to protect yourself.

1. The Legal and Regulatory Framework

1.1. The Lending Company Regulation Act of 2007 (Republic Act No. 9474)

Purpose: RA 9474 regulates the establishment and operation of lending companies in the Philippines.
Key Provisions:
- Lending companies must register with the Securities and Exchange Commission (SEC) and comply with reporting requirements.
- They must disclose interest rates and charges in a clear manner.
- Lending companies are required to conduct business in a fair and transparent manner.

1.2. SEC Rules and Regulations on Lending and Financing Companies

SEC Oversight: The SEC has issued several Memorandum Circulars aimed at cracking down on abusive lending practices, especially by online lending applications.
Penalties and Sanctions: The SEC can penalize unregistered lenders, revoke the licenses of those who engage in unfair debt collection, and even file criminal cases against violators.

1.3. The Financial Products and Services Consumer Protection Act (Republic Act No. 11765)

Scope: Enacted in 2022, RA 11765 enhances consumer protection with respect to financial products and services.
Key Features:
- Empowers regulators such as the Bangko Sentral ng Pilipinas (BSP) and the SEC to enforce stricter guidelines on consumer protection.
- Prohibits unfair collection practices.
- Mandates clear disclosure of loan terms and conditions.

1.4. Data Privacy Act of 2012 (Republic Act No. 10173)

Privacy Violations: Many abusive online lenders resort to “shaming” tactics—accessing a borrower’s contact list and sending messages to friends, family, or colleagues. This can constitute a violation of RA 10173 if personal data is processed without lawful basis or beyond the scope of consent.
National Privacy Commission (NPC): The NPC enforces this law. Borrowers who believe their data privacy rights have been violated can file complaints with the NPC.

1.5. Absence of a Strict Usury Law and the Concept of “Unconscionable” Rates

Usury Law: The Philippines technically has an existing Usury Law (Act No. 2655), but interest rate ceilings were lifted in the 1980s. Today, there is no fixed statutory cap on interest rates; however, courts may declare an interest rate “unconscionable” and void (or reduce it) if it is excessively high.
Supreme Court Rulings: The Supreme Court has repeatedly held that although parties are free to stipulate on the interest rate, courts can strike down such rates if they are “excessive, iniquitous, unconscionable, and exorbitant.”

2. Common Harassing Practices by Some Online Lenders

Threatening Language
- Making threats of arrest, detention, or public exposure.
- Using profanity or obscene language.
Unauthorized Contact with Third Parties
- Sending messages to the borrower’s family, friends, or employer.
- Posting a borrower’s personal details on social media or group chats.
Public Shaming
- Creating group chats or social media posts labeling the borrower as a delinquent.
- Using the borrower’s photo without consent.
Excessive or Unclear Fees and Hidden Charges
- Imposing large processing fees and penalties not clearly disclosed at the outset.
- Applying daily compounding interest that drastically inflates the principal.
Misrepresentation
- Posing as law enforcement or government officials to intimidate borrowers.
- Claiming that the borrower will be criminally charged for simple non-payment of a civil debt.

3. Strategies for Handling Harassment and High Interest

3.1. Document and Gather Evidence

Maintain a Record: Save screenshots, call recordings (if legally permissible), chat messages, emails, and any other evidence of harassment.
Write Down Details: Note the time, date, and nature of every collection call or message, especially if it contains threats or abusive language.

3.2. Verify the Lender’s Legitimacy

Check SEC Registration: Confirm whether the lender is registered with the SEC. You can search the SEC’s website or call their hotline to verify if a lending or financing company is legitimate.
Check Business Permits: Reputable companies typically have official business registrations and clear contact details.

3.3. Understand Your Loan Contract

Review Terms and Conditions: Carefully read the interest rate, penalty charges, and the total costs of borrowing stated in your contract or mobile application.
Identify Unconscionable Terms: If the interest or fees seem disproportionate or hidden fees are levied, consult a lawyer or consumer advocacy group for further advice.

3.4. Assert Your Rights Under the Law

Demand Fair Treatment: Inform the lender that you know your rights and refer to the relevant laws (RA 9474, RA 11765, Data Privacy Act).
Request Written Communication: If phone calls are harassing, request that the lender communicate with you only in writing or via email, so there is a paper trail.

3.5. Consider Debt Restructuring or Negotiation

Open Communication: If you genuinely want to repay but find the terms unmanageable, communicate a repayment proposal or restructuring plan.
Legal Assistance: Seek help from a legal aid clinic or a lawyer to negotiate a more manageable repayment schedule.

4. Filing Complaints and Seeking Redress

Securities and Exchange Commission (SEC)
- What They Handle: Violations of RA 9474, unregistered lending companies, abusive collection practices by SEC-registered lending or financing companies.
- How to File:
  - Submit a complaint via the SEC’s Enforcement and Investor Protection Department (EIPD).
  - Provide relevant documentation, such as screenshots or call logs.
National Privacy Commission (NPC)
- What They Handle: Violations of the Data Privacy Act, including unauthorized use or disclosure of personal data.
- How to File:
  - File a complaint on the NPC’s website or visit their office.
  - Present evidence showing how the lender misused your personal information.
Philippine National Police (PNP) or National Bureau of Investigation (NBI)
- What They Handle: Harassment, threats, or potential criminal offenses like extortion or cyber-libel.
- How to File:
  - Report the incident to the Anti-Cybercrime Group of the PNP or the NBI Cybercrime Division.
  - Provide evidence (screenshots, recordings) of the threats or defamatory statements.
Local Courts
- What They Handle: Civil cases involving loan disputes or suits for damages arising from harassing actions.
- Legal Counsel: It is highly advisable to seek the assistance of an attorney if you plan to sue a lender or if the lender sues you for collection.

5. Potential Penalties for Abusive Lenders

SEC Penalties
- The SEC can suspend or revoke a lender’s Certificate of Authority to Operate.
- It can impose administrative fines for non-compliance with SEC rules.
- It can refer the case for criminal prosecution if the lender is operating illegally.
NPC Penalties (Data Privacy Violations)
- Administrative fines ranging from a few thousand pesos up to millions, depending on the gravity of the offense.
- Criminal liabilities in severe cases where personal data was maliciously and illegally disclosed.
Criminal Charges
- Harassment or threats can lead to cases of grave threats, unjust vexation, libel, or cyber-libel under the Revised Penal Code and other special laws.
Civil Liabilities
- Borrowers can sue for damages if harassment or privacy violations cause measurable harm or reputational injury.

6. Practical Tips for Consumers

Borrow Only What You Can Repay
- The best way to avoid harassment is prevention. Assess your repayment capacity before taking out loans, especially from online platforms.
Read Reviews and Do Research
- Before downloading a lending app or dealing with a lender, look up online reviews, news articles, or SEC advisories.
Limit Access to Your Contacts
- Review an app’s permissions on your phone. Many unscrupulous lenders access a borrower’s phonebook, which they then use to harass third parties.
Maintain Open Communication
- If you encounter financial difficulties, proactively communicate with your lender. Good-faith efforts to repay can sometimes deter aggressive collection tactics.
Seek Professional Advice Early
- If you suspect that terms are unfair or if you encounter early signs of harassment, consult a lawyer or a reputable consumer advocacy group rather than waiting for the problem to escalate.

7. Conclusion

Harassment and exorbitant interest rates by some online lenders remain pressing issues in the Philippines. Fortunately, there are legal frameworks to protect borrowers, including RA 9474 (Lending Company Regulation Act), the Financial Products and Services Consumer Protection Act (RA 11765), and the Data Privacy Act (RA 10173). Understanding your rights and documenting abusive conduct are critical in defending yourself against unscrupulous lending practices.

Should you face harassment, remember that you have avenues for redress: you can lodge complaints with the Securities and Exchange Commission, the National Privacy Commission, or law enforcement agencies, depending on the nature of the violation. Finally, consult legal professionals to explore the best course of action for your specific circumstances. By being proactive and informed, borrowers can protect themselves and help foster a fair, transparent lending environment in the Philippines.

Disclaimer: This article is meant solely for informational purposes and does not substitute for professional legal counsel. If you require legal advice specific to your situation, please consult a qualified attorney.