Letter to a Lawyer

From a Concerned Borrower

Dear Attorney,

I am writing to seek your guidance regarding repeated harassment I have been experiencing from an online lending entity. Recently, after taking out an online loan, I started receiving daily calls and messages that have escalated from polite reminders to harassing and threatening language. The representatives have been sending me intimidating texts, calling at inconvenient hours, and even contacting people in my phone directory without my explicit permission. I am deeply concerned about the legality of their actions and what I can do to protect myself. I wish to know my legal rights and the possible remedies available under Philippine law. Any advice on how to properly document, report, and stop this harassment would be greatly appreciated.

Thank you for your time and consideration.

Sincerely,
A Concerned Individual

Comprehensive Legal Article on Philippine Law Addressing Online Lending Harassment

Introduction

Online lending platforms have proliferated in the Philippine financial landscape, providing consumers with easier and faster access to credit. While these digital lending solutions can be beneficial, there is a growing problem of borrower harassment arising from certain unscrupulous lending agencies. Borrowers have reported various forms of harassment, including incessant calls, threatening text messages, public shaming on social media, unauthorized disclosure of personal information, and other intrusive methods of collection. This article aims to provide a thorough, detailed, and meticulous examination of Philippine laws and regulations governing such behavior, available remedies for borrowers, and the proper channels through which complaints may be filed.

A. Regulatory Framework for Lending Entities in the Philippines

Lending Company Regulation Act of 2007 (Republic Act No. 9474)
RA 9474 provides the general legal framework for lending companies operating in the Philippines. While it does not specifically detail harassment or abusive collection practices, it sets forth registration requirements, capitalization standards, and basic operational guidelines for lending enterprises. Lending companies must be duly licensed by the Securities and Exchange Commission (SEC) and comply with the rules set forth by the SEC. Failure to do so could subject them to sanctions, fines, and potential revocation of their licenses.

Under the implementing rules and regulations of RA 9474, lending entities are expected to adopt fair and ethical treatment of borrowers. When they engage in harassment, they run afoul not just of ethical standards, but potentially other laws aimed at consumer protection and privacy.
Fintech-Specific Regulations and SEC Memoranda
With the emergence of financial technology (fintech) lending platforms, the SEC has issued various Memorandum Circulars outlining the obligations of online lending platforms. These regulations require disclosure of interest rates, prevention of abusive collection practices, and adherence to relevant laws. In recent years, the SEC has cracked down on lending companies that harass borrowers, especially those who operate without proper registration or who employ abusive collection tactics. The SEC has the authority to suspend or revoke certificates of authority to operate and impose monetary penalties for violations.
Consumer Act of the Philippines (Republic Act No. 7394)
Although RA 7394 primarily deals with consumer product safety and fair trade practices, it also upholds the principle of fair and equitable treatment of consumers. Borrowers of online lending apps can arguably be considered consumers of financial services, thereby entitling them to protection under general consumer protection principles. Any deceptive, unfair, or abusive act by a lender may constitute a violation of fair consumer treatment and result in legal liability.

B. Relevant Laws on Harassment and Privacy

Data Privacy Act of 2012 (Republic Act No. 10173)
One of the key statutes that can be invoked against online lending harassment is the Data Privacy Act (DPA). Lending companies often require borrowers to provide sensitive personal information, including contact lists, phone numbers, email addresses, and sometimes even access to their mobile devices. Under the DPA, lenders are mandated to ensure that personal data is collected for a legitimate purpose and processed fairly and lawfully. Unauthorized sharing of the borrower’s personal data—such as calling or messaging their contacts without consent, or publicly posting personal information—may violate data privacy rights.

The National Privacy Commission (NPC), the primary enforcement agency of the DPA, has issued warnings and has entertained complaints against online lending platforms engaging in unauthorized use and disclosure of personal data. Such actions are punishable by fines and, in serious cases, even imprisonment of responsible officers. Borrowers can file complaints with the NPC if they believe their data privacy rights have been infringed.
Revised Penal Code Provisions on Grave Threats, Coercion, and Slander
Harassment by online lenders may sometimes escalate into criminal acts. The Revised Penal Code (RPC) of the Philippines penalizes grave threats, coercion, and acts of slander or oral defamation. If a lending company representative threatens physical harm or spreads false and damaging information about a borrower, these acts can give rise to criminal charges. Though the borrower would need to provide evidence of such threats or defamatory statements, the possibility of criminal liability can deter unscrupulous lenders.
Cybercrime Prevention Act of 2012 (Republic Act No. 10175)
Online lending harassment often occurs through digital communications—text messages, emails, online chats, or social media posts. Under RA 10175, certain activities carried out through ICT (Information and Communications Technology) systems are considered offenses if they violate another law. Cyber libel, for example, can apply if a lender publicly posts derogatory, untrue statements about a borrower online. Similarly, unauthorized access, data interference, or illegal interception of data can also be punished under this Act. Although the primary target of this law is to cover crimes facilitated by technology, it can complement the legal framework that protects borrowers from harassment.
The Bill of Rights and Constitutional Guarantees
The 1987 Philippine Constitution guarantees the right to privacy, and although this is generally enforced against government intrusion, the principle influences the interpretation of privacy laws and civil rights. Arbitrary invasion of a person’s privacy by private entities, though not directly actionable through constitutional law, can support claims under the DPA and tort law principles. Courts may take constitutional values into account when deciding cases related to harassment and privacy violations.

C. Specific Forms of Harassment by Online Lending Entities

Excessive Calling and Texting
Online lending companies may resort to a barrage of phone calls and text messages to pressure borrowers into paying. When these communications become relentless, happening even during late nights or early mornings, and are accompanied by threatening language, they may amount to harassment. There is no specific law enumerating how many calls constitute harassment, but reasonableness and good faith are standards courts may consider. The presence of intimidation, abusive language, or threats bolsters a claim that the conduct has crossed a legal line.
Public Shaming and Contacting Third Parties
Some borrowers have reported that lending apps access their contact lists and send messages to the borrower’s friends, colleagues, or family members, informing them about the outstanding debt or making disparaging remarks. Public shaming or involving unrelated third parties in the collection process can be deemed illegal under data privacy laws and may constitute defamatory acts if false information is shared. The SEC and NPC have both taken notice of such practices and have initiated enforcement actions against offending companies. Violations of this nature can lead to a suspension or revocation of a lending company’s authority to operate.
Unauthorized Access to Personal Information
One reason online lending apps can engage in such invasive collection practices is that borrowers may have granted them access to their phone’s contact list or personal data by consenting to permissions upon installation of the app. However, under the DPA, consent must be informed, freely given, and for a legitimate purpose. Blanket consents that are not fully explained to borrowers do not absolve lending companies of liability for misuse of personal information. Any use of data that goes beyond what is necessary to process the loan and collection may violate the DPA, especially if it involves unauthorized disclosure to third parties or other acts that cause harm to the borrower.

D. Remedies Available to Borrowers

Civil Remedies
Borrowers can seek civil damages for harassment, defamation, or violation of privacy rights. Under Philippine law, any person who suffers damage because of another’s wrongful act may file a civil action for damages. This can include moral damages for mental anguish and reputational harm caused by the lender’s actions. Although litigation may be time-consuming and costly, it serves as a deterrent against future abuses by the lending company.
Criminal Complaints
If the harassment involves threats, coercion, defamation, or hacking of personal information, the borrower can consider filing criminal complaints. The Revised Penal Code, Data Privacy Act, and Cybercrime Prevention Act each provide criminal penalties for certain wrongful acts. Borrowers should gather evidence, such as screenshots of threatening messages, call logs, or affidavits from witnesses, and present these to the appropriate law enforcement agencies or prosecutors. Law enforcement’s role is crucial in investigating and verifying the authenticity of the evidence.
Administrative Complaints with the SEC and NPC
The SEC has administrative jurisdiction over lending companies. Borrowers can file complaints with the SEC’s Compliance and Enforcement Department, reporting abusive collection tactics. If the SEC finds that the lending company violated its rules or relevant laws, it may impose sanctions, fines, or suspend or revoke the company’s license. This can be a powerful remedy, as lending companies rely on their SEC-granted authority to operate. A pattern of complaints and documented evidence of harassment can lead to swift enforcement actions.

Similarly, the NPC is the appropriate body to handle complaints related to data privacy violations. If a borrower believes that personal information has been misused or that their data privacy rights have been violated by the online lender, they can file a complaint with the NPC. The NPC may investigate, issue cease-and-desist orders, require the lending company to adopt corrective measures, or impose monetary penalties. Serious or repeated violations can lead to criminal referrals and stricter penalties.
Approaching the Bangko Sentral ng Pilipinas (BSP)
While many online lenders are not banks and may not be directly regulated by the BSP, if the entity is a financing company or if it indirectly involves BSP-regulated entities (such as certain payment channels), borrowers can also inquire about possible redress or mediation programs. The BSP actively promotes consumer protection and financial inclusion, encouraging lenders to adopt fair and transparent lending and collection practices.
Alternative Dispute Resolution
Parties may consider mediation or arbitration, especially if there is a contractual clause providing for such. Alternative dispute resolution mechanisms can be faster and less adversarial, offering a confidential and structured way to resolve disputes without extensive court proceedings. However, the success of ADR depends on the willingness of the online lender to participate in good faith, as well as the existence of an ADR clause in the loan agreement.

E. How to Document and Strengthen Your Case

Gathering Evidence
When facing harassment, it is crucial to document every instance. Save screenshots of text messages, emails, and chat conversations. Keep detailed notes of the date, time, nature of calls, and the content of any conversation that could be construed as harassing or threatening. If friends or family members receive calls or messages, ask them to record their experiences and secure evidence. The quality and quantity of evidence can significantly influence whether authorities will pursue enforcement actions or whether a case will be successful in court.
Verifying the Lender’s Credentials
Check if the online lending entity is registered with the SEC. The SEC’s official website maintains a list of licensed lending and financing companies. If the entity is not registered, report it immediately to the SEC. Operating without authority is itself a violation, and unregistered companies are more likely to engage in illegal and unscrupulous activities. For those that are registered, verifying their certificate of authority can provide leverage in holding them accountable to SEC regulations.
Consulting a Lawyer
Seek professional legal assistance. A lawyer can help evaluate the strength of your case, guide you on which legal remedies to pursue, assist with drafting and filing complaints, and represent your interests in negotiations, administrative proceedings, or in court if needed. Although retaining counsel involves costs, it can provide the necessary expertise to ensure that your rights are effectively protected and that your claims are properly presented.
Filing Complaints with Relevant Agencies
After gathering evidence, you may file a complaint with the SEC for regulatory violations or with the NPC for data privacy breaches. Attach relevant documents, including screenshots, affidavits, and correspondence. The complaint should clearly state the nature of the harassment, the timeline of events, and the relief sought. It is important to follow the procedures set forth by these agencies to ensure proper handling of the complaint.

F. Potential Penalties for Violating Lenders

Administrative Penalties
Lending companies found guilty of harassment and abusive collection practices may face administrative penalties from the SEC, such as fines and suspension or revocation of their certificates of authority. The SEC may also issue warnings, reprimands, or impose undertakings to improve compliance.
Civil Damages
Courts can award moral, exemplary, and even nominal damages to borrowers who prove that they have suffered injury or harm as a result of the lender’s harassment. Moral damages compensate the borrower for the mental anguish, anxiety, or reputational harm caused, while exemplary damages punish the offender’s unethical conduct and deter similar future actions.
Criminal Liabilities
Violations of the Data Privacy Act can result in imprisonment ranging from a few months to several years, depending on the severity of the offense. Fines can also be substantial. Under the Revised Penal Code, those found guilty of grave threats, coercion, defamation, or unjust vexation can face imprisonment or fines. For offenses under the Cybercrime Prevention Act, penalties can be more severe due to the involvement of ICT in committing the crime.

G. Recent Developments and Enforcement Trends

In recent years, the Philippine government has recognized the growing problem of harassment by online lending platforms. The SEC has taken proactive steps by warning borrowers about unethical lenders and actively encouraging victims to file complaints. Periodic raids and crackdowns on illegally operating lending companies have also demonstrated the government’s intent to protect the public.

The National Privacy Commission has likewise become increasingly vigilant, issuing orders against lenders that weaponize borrowers’ personal data. Public advisories from the NPC remind borrowers not to give blanket permissions or access to their contact lists and to read thoroughly the terms and conditions before consenting to share personal data.

Media coverage and social media discussions of borrower harassment have heightened public awareness. Victims have found solidarity in sharing their experiences online, prompting more individuals to come forward with complaints. The collective effort of consumers, regulators, and advocacy groups helps ensure that borrowers are better informed and more empowered to stand up for their rights.

H. Preventive Measures for Borrowers

Reading the Terms and Conditions
Before availing of any online loan, borrowers should carefully read the loan agreement. Understand what consents you are granting regarding access to your personal data, how collections will be conducted, and what recourse you have if harassment occurs. If the terms seem overly invasive or unclear, consider seeking alternative lending sources.
Deactivating Unnecessary Permissions
On mobile devices, borrowers can manage app permissions to limit access to contacts, camera, or storage. By restricting permissions, you reduce the likelihood that the lending app can misuse your data. The Data Privacy Act requires that consents be obtained for a specific purpose. Thus, it is prudent not to grant broad permissions that can later be exploited.
Early Intervention
If the lender’s collection calls become frequent or aggressive, communicate firmly and in writing. Remind them of your rights, request more time if needed, and keep a record of these communications. Sometimes, a formal notice that you are aware of the law and willing to take legal action if harassment persists can discourage further abuse.
Seeking Help from Advocacy Groups
Consumer advocacy organizations, legal aid clinics, or NGOs that focus on financial literacy and consumer rights can provide free or low-cost advice. They can guide you through the complaint process, help draft letters, and direct you to the appropriate agency or authority.

I. Conclusion

Harassment by online lending platforms is a serious and persistent issue in the Philippines that undermines consumer confidence in fintech solutions. Philippine law provides a variety of safeguards to protect borrowers, from administrative and regulatory measures enforced by the SEC and the NPC, to civil and criminal remedies in the courts. Borrowers who are victims of harassment are encouraged to diligently gather evidence, understand their rights under the relevant laws, and file complaints with the appropriate agencies.

Proactive measures, such as reading terms and conditions before taking out loans and limiting app permissions, can help prevent harassment. With greater awareness, proper documentation, and timely legal action, borrowers can stand up against harassment, deter predatory lending practices, and ultimately contribute to a more just and equitable financial landscape in the Philippines.