Digital transactions are more easy and speedier these days.
You may use a laptop or smartphone to apply for and be authorized for loans at any time, anywhere, thanks to online lending platforms and online lenders.
Online loans are therefore appealing choices for those with little funds.
Regretfully, some lenders in the Philippines use intimidation and threats to get repayment for outstanding internet loans. In 2023, authorities detained 35 employees of an online lender in Makati for allegedly harassing customers who failed to make their loan payments on schedule.
Furthermore, other accounts have been reported regarding these abusive collection tactics, so it’s not simply one isolated instance.
If you’re in a similar situation right now, this article will help you deal with harassing or threatening phone calls from internet lenders.
How to Respond If a Lender Harasses You for an Overdue Online Loan?
What should you do if you’re being harassed by internet lenders? SLAP.
This does not imply causing someone bodily harm. It is actually an acronym:
SLAP: Stay calm, Learn, Arrange, and Pursue
We’ll go over each of these processes in detail below.
Stay Calm
Your natural response to insults directed at you by collectors or lenders could be to become enraged back.
It’s simple to get agitated; these times will sap your vitality. However, when tempers rise, judgment is impaired. It’s best to respond with composure.
Don’t allow these dishonest people to worry you.
You do indeed owe them money. However, that gives them no right to intimidate, threaten, or defame you. Demand equitable treatment.
Make contact with the business and voice your concerns.
This is crucial: in the event that you choose to file a formal complaint in the future, you will need to show documentation that you contacted the business or used all available channels to stop the harassment.
The first step is to remain composed.
It will be challenging to complete the fourth and final step if you let your heightened emotions get in the way.
Learn
When it comes to dealing with credit collection agencies, the adage “knowledge is power” is equally applicable.
Discover the rights and wrongs of lending as well as unjust collecting practices.
Learn the guidelines and use this as a weapon against threats and abuse from internet lenders.
What is an fair collection practice?
When it comes to collecting payments from borrowers, lenders or their representatives are unable to engage in unfair collection techniques.
Lenders may only use fair and lawful methods to collect the money owed to them. If they are discovered to have engaged in unfair collection practices, they will face fines.
Agencies that determine unfair collection practices
In the Philippines, the Bangko Sentral ng Pilipinas (BSP) governs banks, credit card firms, and the organizations that handle their collections. BSP published BSP Circular No. 454 Series of 2004, which prohibits dishonest or improper behavior by banks, credit card issuers, and collection agencies. It also mentions injustices such as threats, insults, calling before 6:00 a.m. or after 10:00 p.m., etc.
The Securities and Exchange Commission (SEC) governs lending businesses (LCs) and finance companies (FCs). It released SEC Memorandum Circular No. (MC) 18 in 2019, listing actions deemed to be unfair collection methods.
The list is identical to those that BSP Circular No. 454 prohibits.
Debt collection practices that are considered unfair
Under SEC MC 18, the following are regarded as unfair collecting techniques by FCs and LCs:
- Threatening or using violence to damage the borrower’s property, reputation, or both
- Threatening to do something that isn’t allowed by law
- Using foul words, insults, or obscenity
- Those permitted by MC 18 Section 2 excepted, releasing or publicizing the names and other private data of debtors accused of not making payments on their obligations.
- Anyone communicating loan information as fraudulent and known to be false, or threatening to do so, aside from the situations permitted by Section 2 of MC 18.
- Using fraudulent representation or dishonest methods to get information about a borrower or collect any debt
- Making contact before 6:00 a.m. or following 10:00 p.m. aside from:
- If the account is more than fifteen days past due; or
- The borrower explicitly agreed that only certain hours would constitute an appropriate or practical window of opportunity for communication.
- Getting in touch with everyone on the borrower’s contact list (apart from co-makers and guarantors)
Can a collecting agent, with the borrower’s approval, get in touch with the people in their contact list?
Not at all. SEC MC 18 states that the individuals on the borrower’s contact list—aside from co-makers or guarantors—cannot be reached, even with their approval.
If not, this would be considered an unfair debt-collecting method.
The National Privacy Commission (NPC) published Circular No. 20-01, titled Guidelines on the Processing of Personal Data for Loan-Related Transactions, forbidding internet lenders from using contact lists or email lists for debt collection purposes to harass borrowers or their contacts.
According to the Data Privacy Act, the NPC has jurisdiction over violations of data privacy. For further information, visit the NPC website.
If lenders outsource their collection efforts, are they still accountable for unjust collection practices?
Indeed. The FCs or LCs retain the final say over collection procedures and SEC MC 18 compliance, even in cases where SEC MC 18 permits the outsourcing of payment collection to a third-party service provider.
What are the penalties for unfair collection practices?
The FCs and LCs shall be liable to the following penalties for any infringement of SEC MC 18:
| Penalty | Lending Companies | Financing Companies |
| First offense | ₱25,000 | ₱50,000 |
| Second Offense | ₱50,000 | ₱100,000 |
| Third Offense | Any of the following:A fine of not less than twice the fine for the second offense but not more than ₱1 millionSuspension of lending and financing activities for 60 daysRevocation of Certificate of Authority to operate as an FC or LC | Any of the following:Fine of not less than twice the fine for the second offense but not more than ₱1 millionSuspension of lending and financing activities for 60 daysRevocation of Certificate of Authority to operate as an FC or LC |
Are online loans legal in the Philippines?
An online lending platform or business that operates lawfully in the Philippines is registered with the SEC.
The SEC made the list of online lending platforms public on its website. It also includes LCs and FCs whose licenses or Certificates of Authority have been revoked.
In response to multiple complaints the SEC received about purported violations by online lending platforms, the SEC issued SEC MC 10 Series of 2021, establishing a suspension on the operation of any new online lending platforms in the Philippines.
In order to support lending and financing enterprises while guaranteeing the protection of consumers in the Philippines, SEC MC 10 states that it is necessary to regularly monitor and evaluate the activities of currently operating online lending platforms.
Online lenders must notify the SEC of their activities no later than ten days before their launch, per SEC regulations. Otherwise, SEC MC No. 19 is broken by this. This carries consequences.
The SEC keeps stepping up its enforcement actions against predatory lenders who intimidate or degrade borrowers.
Is it possible to collect my past-due loan and humiliate me using my photo?
Not at all. NPC Circular No. 20-01, which states that a borrower’s photo may only be used for Know Your Client (KYC) purposes, is broken by this.
Clearly, the lender may not utilize the borrower’s picture in any way to harass or humiliate them in order to pursue an outstanding online loan in the Philippines.
Arrange
The collection agent that has been intimidating or harassing you may discover that you need to delete any texts or emails that they have sent you. Avoid it.
Arrange and get ready these communications to show that there have been threats or harassment. Make sure to gather all relevant evidence. Try to be as specific as you can.
Making a formal complaint to a court or regulatory body is similar to baking. Make sure you have all the materials ready before you start.
You need to have all the evidence necessary to prove your case against the harassing or threatening lender or collection agency in this situation. If there is insufficient evidence to back up the accusations, complaints made to regulatory bodies or courts are likely to be disregarded.
Pursue
After arming yourself with knowledge about your rights and accompanying documentation, you can register a formal complaint with the regulating body (SEC, BSP, or NPC) to stop these lenders or collecting agents from abusive actions. “Where do I report online lending harassment in the Philippines?”
You can register it with the BSP if it’s a bank or non-bank financial entity that falls under its purview. Visit the BSP website to view the list of banks and non-bank financial institutions.[8]
The SEC is the appropriate place to register complaints about online lenders. Get a copy of the complaint form on the SEC website.
Complete this form, along with any supporting documentation, proof, and documents, along with a legitimate government-issued identification card.
As was mentioned in Step 1, before submitting your complaint to the SEC, you have to show that you tried to contact the corporation or that you have used all available options.
The SEC accepts email complaints, much like the BSP and NPC do. To make it easier for borrowers to comprehend the prerequisites for submitting complaints against FCs and LCs, the SEC produced the following video tutorial:
SEC Philippines | How to File A Complaint
Conclusion
Understand your rights so that you can demand equitable treatment from the online lenders. One way to get started is to read articles like this one.
Yes, there are many terrifying tales of online lenders in the Philippines harassing or threatening customers over unpaid loans. However, there are others who are not looking to take advantage of you.
Just remember to look out for warning signs. Make sure you are working with trustworthy internet lenders at all times.
Debt issues can have a negative impact on your mental health, just like other life challenges, but have faith that you can overcome them.
Stay Safe Online: Safeguarding Against Predatory Online Lenders
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Resources
Erituralde. “MC No. 18 s.2019 – Prohibition on Unfair Debt Collection Practices of Financing Companies(FC), and Lending Companies(LC).” Securities and Exchange Commission, 15 Aug. 2023, www.sec.gov.ph/mc-2019/mc-no-18-s-2019-prohibition-on-unfair-debt-collection-practices-of-financing-companiesfc-and-lending-companieslc/#gsc.tab=0.
“35 Supervisors of Makati Online Lending Firm Charged Over ‘loan Scam.’” Philippine News Agency, www.pna.gov.ph/articles/1212385.
