Letter to an Attorney:

Dear Attorney,

I hope this letter finds you well. I am reaching out to seek legal advice regarding an urgent matter involving an online lending platform. I had borrowed money from this platform, but due to unforeseen financial difficulties and family problems, I have not yet been able to repay the loan. I have explained my situation to them and assured them of my intent to pay, but I am currently unable to settle the balance.

Unfortunately, the lender has imposed exorbitant interest rates, and their representatives have resorted to sending threatening messages. These messages include explicit threats to my life and my family, such as warnings that my family will be harmed, threats of sending a coffin to my home, and other similarly distressing communications. Despite my efforts to request leniency and more time, they continue to harass me.

I want to know what legal options are available to me under Philippine law to address this situation. I assure you that I intend to settle my debt, but I seek protection from their abusive practices. Thank you for your guidance.

Sincerely,
A Concerned Borrower

Legal Discussion: Addressing Harassment and Usury by Online Lending Platforms in the Philippines

Introduction

Online lending platforms have proliferated in the Philippines in recent years, offering convenient and accessible financial assistance. However, their practices have also been marred by complaints of exorbitant interest rates and harassment of borrowers. Borrowers often find themselves overwhelmed by aggressive collection tactics, including threats, public shaming, and other forms of harassment. This article delves into the legal remedies available under Philippine law for borrowers facing these challenges.

1. Legal Framework Governing Online Lending

A. Republic Act No. 3765 (The Truth in Lending Act)

The Truth in Lending Act requires creditors to disclose the true cost of credit to borrowers, including interest rates, service charges, and other fees. It aims to protect consumers from hidden and excessive charges by ensuring transparency.

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

This law safeguards consumer rights, including protection from abusive debt collection practices. It prohibits harassment, threats, and misrepresentation by creditors.

C. Republic Act No. 8484 (Access Devices Regulation Act)

RA 8484 penalizes abusive and malicious use of devices for extorting money. This law applies to digital transactions, including online lending platforms that use technology to harass borrowers.

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

The Data Privacy Act prohibits unauthorized use and disclosure of personal information. Lenders who publicly shame borrowers or misuse their personal data violate this law.

E. The Revised Penal Code (RPC)

Articles 282 and 287 of the RPC criminalize grave threats and unjust vexation, which may be applicable when lenders send threatening messages to borrowers.

2. Analysis of the Borrower’s Case

A. Exorbitant Interest Rates

Under the Truth in Lending Act and relevant Bangko Sentral ng Pilipinas (BSP) regulations, lenders are required to maintain reasonable interest rates. Excessive interest, often deemed usurious, may be challenged in court. Though the Usury Law was effectively repealed, the courts consider interest rates unconscionable if they are grossly excessive and exploitative.

B. Harassment and Threats

The borrower's account of receiving threatening messages, including threats of harm and death, constitutes grave threats under the Revised Penal Code. The specific threat to send a coffin is not only morally reprehensible but also legally actionable as unjust vexation and harassment.

C. Violation of Data Privacy

If the lending platform has accessed or disclosed the borrower’s personal information without consent, they are in violation of the Data Privacy Act. Such actions include public shaming, sharing personal details to intimidate the borrower, or threatening to inform others about the debt.

3. Legal Remedies and Protections

A. Filing a Complaint with the National Privacy Commission (NPC)

Borrowers may file a complaint with the NPC for breaches of the Data Privacy Act. The NPC can investigate and impose sanctions on lending companies that misuse personal data.

B. Lodging a Complaint with the Securities and Exchange Commission (SEC)

The SEC regulates online lending platforms and has issued guidelines against unfair collection practices. Borrowers can report abusive lenders to the SEC, which has the authority to penalize or revoke the licenses of non-compliant platforms.

C. Criminal Charges

Borrowers may file criminal complaints for:

Grave Threats (Article 282, RPC)
Unjust Vexation (Article 287, RPC)

D. Filing a Civil Case for Damages

Borrowers subjected to harassment and emotional distress may seek damages under Article 19 of the Civil Code for violations of rights.

E. Engaging with the Bangko Sentral ng Pilipinas (BSP)

The BSP oversees financial institutions, including lending companies, and enforces consumer protection regulations. Complaints may be escalated to the BSP if the platform is under its jurisdiction.

4. Guidelines for Borrowers

Document Evidence: Keep records of all communications, including screenshots of threatening messages, receipts, and loan agreements.
Verify Lender Legitimacy: Ensure the lending platform is registered with the SEC. Unregistered platforms often engage in illegal practices.
Cease-and-Desist Letter: Borrowers may send a formal letter demanding that the lender stop harassment and abide by legal procedures.
Seek Legal Assistance: Engaging a lawyer ensures proper representation and guidance in filing complaints or court cases.

5. SEC and BSP Interventions

A. SEC Memorandum Circular No. 18, Series of 2019

The SEC prohibits abusive collection practices, such as threats, shaming, and intimidation. It has the authority to investigate and penalize violators.

B. BSP Circular No. 1048

This circular outlines the rules for fair debt collection practices, emphasizing the borrower’s right to privacy and protection from harassment.

6. Ethical and Practical Considerations

While borrowers have the moral and legal obligation to repay their loans, lenders must respect legal boundaries and uphold ethical standards in debt collection. Abusive practices tarnish the reputation of legitimate lending platforms and undermine trust in financial services.

Conclusion

Borrowers facing harassment and exorbitant charges from online lending platforms have multiple avenues for legal recourse under Philippine law. By documenting abuses, filing complaints with appropriate regulatory bodies, and seeking legal advice, borrowers can protect their rights while fulfilling their financial obligations responsibly. It is imperative to balance accountability with compassion and fairness in resolving disputes in the lending industry.