Online Lending App Harassment: What the Law Says

Yes, abusive collection is prohibited. RA 11765, the Financial Products and Services Consumer Protection Act, covers financial service providers under the Bangko Sentral, the SEC, the Insurance Commission and the Cooperative Development Authority (Section 3). It says:

• financial service providers "are prohibited from employing abusive collection or debt recovery practices against their financial consumers" (Section 8(d));
• clients have the right to "refuse the sharing of their information to a third party" (Section 8(e));
• the provider "shall be responsible for the acts or omissions of its directors, trustees, officers, employees, or agents" (Section 13), so a lender cannot simply blame an outside collector;
• the BSP, the SEC and the Insurance Commission enforce the law (Section 5).

The law does not list here which collection acts count as abusive. The SEC has its own rules on unfair debt collection by lending and financing companies, but we could not read them on the SEC website, so this page does not list the acts, calling hours or fines they contain.

Under Section 15 of RA 11765, anyone who willfully violates the Act or the regulators' rules is punished by imprisonment of one to five years, or a fine of P50,000 to P2,000,000, or both. Claims under the Act prescribe five years after the transaction, or five years after the deceit or nondisclosure is discovered, and in any event ten years after the violation (Section 14).

Yes. Under the Lending Company Regulation Act of 2007 (RA 9474):

• a lending company is a corporation that grants loans from its own capital or from funds of not more than 19 persons (Section 3);
• it "shall be established only as a corporation" and may not do business "unless granted an authority to operate by the SEC" (Section 4);
• the SEC may suspend or revoke that authority and impose fines (Section 9);
• operating without authority and other listed violations are punished by a fine of P10,000 to P50,000, or imprisonment (the law sets a range from six months up to ten years), or both (Section 12).

Before borrowing, you can ask the company for its SEC authority to operate. We did not read the SEC's lists of registered lenders, so we cannot tell you whether a particular app is registered.

Section 7 of RA 9474 says interest and charges are what the lender and borrower agree on, but the agreement must comply with the Truth in Lending Act (RA 3765). Under Section 4 of that Act, before the loan is made, the lender must give you a clear written statement of, among others, the total amount to be financed, the finance charge in pesos and centavos, and the finance charge as a simple annual rate.

In New Sampaguita Builders v. PNB (2004), the Supreme Court said that "excessive interests, penalties and other charges not revealed in disclosure statements" cannot be given effect under the Truth in Lending Act, even if they are in the promissory note. That case involved a bank, but the rule comes from the disclosure law that lending companies must also follow.

The loan itself stays valid even if the lender broke the disclosure rule (Section 6(b) of RA 3765). On whether a high interest rate can be reduced, see Is 5% monthly interest legal?

It may be a data privacy violation. Under the Data Privacy Act (RA 10173), processing personal information is lawful only if one of the conditions in Section 12 exists, such as the consent of the data subject. Section 16 gives you rights, including to have your data blocked or removed when it was "unlawfully obtained, used for unauthorized purposes", and to be indemnified for damages. Section 16 also names the right to lodge a complaint before the National Privacy Commission (NPC).

To file with the NPC, the 2021 NPC Rules of Procedure, as amended, require these steps (Rule II):

1. Write to the company first. You must have informed the company, in writing, of the privacy violation, so it can act on it (Section 2).
2. Wait for its action. You may file if the company did not take timely or appropriate action, or did not respond "within fifteen (15) calendar days from receipt of written information" (Section 2). The NPC may waive this step for good cause, or when the complaint involves a serious violation of the Data Privacy Act, for example grave and irreparable damage that only the NPC can prevent.
3. File a proper complaint. It must be in writing, signed and verified, with copies of your correspondence with the company and a certification against forum shopping (Section 3).
4. Pay the fee. No further action is taken until the filing fees are paid, unless you are an indigent complainant under the Rules of Court (Section 4). We did not read the fee amount.

Not for the debt alone. The Constitution says: "No person shall be imprisoned for debt or non-payment of a poll tax" (Article III, Section 20). A collector who threatens you with jail just for not paying is misstating the law. Separate crimes connected with a loan are a different matter; see Can you go to jail for unpaid debt? and, for the bigger picture, Debt and collection.

These are made-up examples to show how the rules work. They are not advice for any real case.

Paolo borrows P3,000 through an app. Before borrowing, he asks for the company's SEC authority to operate, because running a lending business without one is a crime under RA 9474.

After Paolo misses a payment, a collector texts his officemates calling him a thief. RA 11765 prohibits abusive collection, and the lender answers for its collection agents (Section 13). Because the texts used his contacts, Paolo first writes to the company about the privacy violation and keeps a copy. If it does nothing within 15 calendar days, he may file a verified complaint with the NPC, attaching his letter and screenshots.

The app gave Paolo no written disclosure statement and deducted a "service fee" from his P3,000. Charges not properly disclosed before the loan may not be collectible (New Sampaguita), but Paolo still owes the amount he actually borrowed.

If the collector's messages publicly accuse Paolo of a crime, they may also raise libel issues: see Cyber libel and Facebook posts.

You can write to the company and file a privacy complaint yourself, but a lawyer helps if the harassment is serious or continuing, if you want to file a criminal complaint or claim damages, if the lender has sued you, or if you are unsure how much you really owe after undisclosed charges. If you were tricked into a fake loan or lost money from your account, see Scammed online: what the law says.

If you cannot afford a lawyer, see Free legal help in the Philippines for the Public Attorney's Office (PAO) and other options.