Legal Protections Against Harassment by Online Lending Companies in the Philippines

What are the legal protections against harassment by online lending companies in the Philippines?

Online lending has become increasingly popular in the Philippines, providing quick and convenient access to credit. However, with its rise, there have been numerous complaints about aggressive and harassing collection practices by some online lending companies. It is important to understand the legal protections available to borrowers to safeguard their rights.

Regulatory Framework

The Bangko Sentral ng Pilipinas (BSP) and the Securities and Exchange Commission (SEC) are the primary regulatory bodies overseeing lending practices in the country. The BSP regulates banks and financial institutions, while the SEC supervises lending companies, including online lenders.

Fair Debt Collection Practices

The SEC issued Memorandum Circular No. 18, Series of 2019, which provides guidelines on the conduct of lending and financing companies. This circular emphasizes fair and respectful debt collection practices, prohibiting any form of harassment, abuse, or threats.

Prohibited Collection Practices

The SEC prohibits the following collection practices:

1. Use of Threats and Harassment: Collectors are forbidden from using threats, obscene language, or any form of harassment against borrowers.
2. Public Shaming: Disclosing a borrower's indebtedness to unauthorized persons, such as posting on social media or contacting the borrower’s family and friends, is strictly prohibited.
3. Unauthorized Access: Accessing the borrower’s phone contacts or social media accounts without explicit consent is illegal.

Borrower’s Rights

Borrowers have specific rights under Philippine law, including:

1. Right to Privacy: Borrowers have the right to keep their financial transactions private. Unauthorized disclosure of their debt status is a violation of the Data Privacy Act of 2012.
2. Right to Fair Treatment: Borrowers should be treated with respect and should not be subjected to abusive or threatening language.
3. Right to Complaint: Borrowers can file a complaint with the SEC if they experience any form of harassment or unfair treatment from lending companies.

Filing a Complaint

Borrowers who face harassment can take the following steps to file a complaint:

1. Document the Harassment: Keep records of all communications, including text messages, emails, and phone calls, that demonstrate harassment.
2. Submit a Complaint to the SEC: Prepare a detailed complaint letter and submit it to the SEC, along with any evidence of harassment.
3. Seek Legal Advice: It may be beneficial to seek legal advice to understand further legal remedies available.

Conclusion

While online lending provides essential financial services, it is crucial for borrowers to be aware of their rights and the protections available against harassment. The regulatory framework in the Philippines aims to ensure fair and respectful treatment of borrowers, and any violations can be addressed through appropriate legal channels.