Dear Attorney,

I have taken out loans from an online loan app and have fallen behind on my payments. They are now harassing me, as well as the contacts I listed on the application. They are even making threats. This situation is becoming very distressing for me and my family. Is there anything I can do to stop them from harassing us?

Sincerely,
A Concerned Borrower

Insights

Harassment and Data Privacy Violations by Online Loan Apps in the Philippines

In recent years, online lending platforms have proliferated in the Philippines, offering quick access to loans through mobile applications. However, many borrowers face illegal debt collection practices, such as harassment and threats, which violate several Philippine laws. This comprehensive discussion will cover the key legal frameworks borrowers can rely on to protect themselves from abusive practices, with a particular focus on data privacy, consumer protection, and relevant criminal laws.

1. The Data Privacy Act of 2012 (Republic Act No. 10173)

The Data Privacy Act (DPA) is a crucial law in the Philippines that protects individuals from unauthorized collection, processing, and sharing of their personal data. Under this law, loan applications, as data processors, must handle a borrower’s personal information in a lawful and secure manner.

Unauthorized Sharing of Contacts: One common abusive tactic is for lending companies to contact the borrower’s family, friends, or professional contacts, even if these individuals are not directly involved in the loan transaction. This act constitutes a violation of the borrower’s data privacy rights.
- Principle of Proportionality: Personal data collected should only be used for the purpose of the loan agreement, and using references or contact lists to harass third parties far exceeds the reasonable use of personal data.
- Data Subject Rights: Borrowers have the right to object to the misuse of their personal data. The National Privacy Commission (NPC) allows individuals to file complaints against companies that misuse personal data, including the improper disclosure of contacts without consent.

Borrowers can file a formal complaint with the NPC to seek relief and damages for breaches of privacy. The NPC has the authority to impose penalties, including fines and imprisonment, on companies that violate the DPA.

2. Cybercrime Prevention Act of 2012 (Republic Act No. 10175)

The Cybercrime Prevention Act addresses crimes committed through electronic means, including online harassment. Lending companies that send abusive, threatening, or intimidating messages via text, email, or social media could be liable for cyber harassment under this law.

Cyber Libel and Threats: Any communications that contain defamatory or threatening language can be subject to prosecution under the law. Borrowers who receive messages that include slanderous accusations or threats of harm can pursue charges against the lending company.
Penalties: Violators of the Cybercrime Prevention Act may face imprisonment and substantial fines. This law applies to anyone using electronic platforms for unlawful purposes, including loan companies.

3. Revised Penal Code – Grave Threats and Coercion

The Philippine Revised Penal Code also provides criminal remedies for borrowers subjected to harassment by lending companies.

Grave Threats: Article 282 of the Revised Penal Code penalizes individuals or entities that issue serious threats against a person’s life, reputation, or property. If the loan app sends messages threatening the borrower with harm or damage to their reputation, this may constitute a criminal act.
Grave Coercion: If a lender forces the borrower or their contacts to perform acts against their will, such as disclosing personal information or making payments under duress, this may qualify as grave coercion, which is punishable under Article 286 of the Penal Code.

4. Consumer Act of the Philippines (Republic Act No. 7394)

The Consumer Act regulates fair trade practices and consumer protection in the Philippines. Borrowers who experience unfair debt collection practices, such as harassment and intimidation, may seek remedies under this law.

Unfair Trade Practices: Debt collection efforts that employ abusive, deceptive, or misleading tactics violate the rights of consumers. The Department of Trade and Industry (DTI) oversees complaints regarding unfair trade practices and may sanction loan companies that engage in these actions.
Right to Redress: Borrowers have the right to file complaints with the DTI, which may impose administrative sanctions on abusive lenders, including fines and suspension of business licenses.

5. BSP Circular No. 1048 (Consumer Protection for Financial Products and Services)

In line with consumer protection, the Bangko Sentral ng Pilipinas (BSP) issued Circular No. 1048, which sets out guidelines for ethical practices in the lending industry. All financial institutions, including digital lending platforms, must adhere to fair debt collection policies.

Prohibition on Harassment: Circular No. 1048 prohibits any collection practice that amounts to harassment, such as contacting the borrower’s employer, relatives, or friends. It also requires lenders to communicate with borrowers in a professional and respectful manner.
Filing a Complaint with BSP: Borrowers can file complaints with the BSP if lending companies engage in unethical or unfair debt collection practices. The BSP can penalize institutions that violate these guidelines, including revoking their licenses.

6. Legal Remedies for Borrowers

Borrowers harassed by lending companies have several legal options:

File a complaint with the National Privacy Commission: This allows borrowers to address privacy violations and seek damages.
File a criminal complaint under the Cybercrime Prevention Act: If harassment occurs online, a case may be pursued under this law.
Lodge a complaint with the Department of Trade and Industry or the Bangko Sentral ng Pilipinas: For unfair trade practices or violations of debt collection guidelines, borrowers may turn to these agencies.
Civil Remedies: Borrowers may also pursue civil cases for damages due to emotional distress caused by the unlawful conduct of lending companies.

7. How to Protect Yourself from Harassment

To safeguard against further harassment, borrowers should take the following steps:

Document All Communications: Keep records of all communications from the lender, including text messages, emails, and social media messages, to build evidence.
Cease and Desist Letters: Borrowers can send a cease and desist letter to the loan company, demanding them to stop contacting third parties and to cease any unlawful practices.
Seek Legal Representation: Engaging a lawyer who specializes in debt collection or consumer protection can provide invaluable support. Lawyers can assist in filing the necessary complaints and can negotiate with the loan company on the borrower’s behalf.

Conclusion

The rise of online lending platforms has provided borrowers with easy access to credit but has also led to a surge in unlawful debt collection practices. Borrowers are protected under various Philippine laws, including the Data Privacy Act, Cybercrime Prevention Act, and the Consumer Act. Harassed borrowers should not hesitate to assert their rights by filing complaints with the appropriate authorities, documenting the harassment, and seeking legal redress to stop abusive lenders.