Ask Moneymax: What to Do When Harassed and Threatened by Lenders? SLAP!

Atty. Aileen Amor - Bautista

Atty. Aileen Amor - Bautista

Last updated April 04, 2022

These days, digital transactions are faster and more convenient, including loans from online lending platforms. Applying and getting approved for loans can already be done anywhere, anytime, and directly just by using a cell phone or laptop. As a result, online loans have become more attractive to cash-strapped borrowers. 

Unfortunately, some online lenders resort to harassment and threats in collecting payments. According to news reports, in February of this year, over 45 workers of online lending applications were arrested for supposedly harassing and threatening clients who were unable to settle their unpaid online loan in the Philippines.[1]

There have been several terrible stories about the abusive collection practices of certain online lenders. If this is your predicament right now, this article will guide you on the steps to take if an online lender is harassing or threatening you.

Related article: What Happens If I Stop Paying My Loan? Everything to Know About Loan Default in the Philippines

Got an Unpaid Online Loan in the Philippines? Here’s What to Do If the Lender Harasses You

What to do if you’re a victim of online lending harassment? SLAP. This does not refer to the controversial act at the 2022 Oscar Awards or the #WillSmithChrisRock incident but is merely an acronym to remember easily: Stay calm, Learn, Arrange, and Pursue. 

Each of these steps will be explained below. Indeed, any form of violence must not be condoned.  

What to do if you’re a victim of online lending harassment? SLAP: Stay calm, Learn, Arrange, and Pursue. 

Step 1: Stay Calm

unpaid loan in the Philippines - stay calm

When faced with personal attacks from lenders or collecting agents, the instinctive reaction is to counter them with anger. It's easy to be upset; these are moments that will drain your energy. 

When tempers flare, it clouds judgment. The best response is to stay calm. Don't let these unscrupulous individuals distress you. 

Yes, you owe them money. But that does not entitle them to harass, threaten, or shame you. Insist on fair treatment. Reach out to the company and elevate to them your concerns. This is important because you must provide evidence or proof that you have reached out to the company or have exhausted all remedies against it when you pursue a formal complaint. 

Take note that staying calm is the first step. If you allow heightened emotions to get in the way, it will be difficult to get to the fourth and last step. 

Yes, you owe them money. But that does not entitle lenders to harass, threaten, or shame you. Insist on fair treatment.

Step 2: Learn

unpaid loan in the Philippines - learn

The familiar quote "knowledge is power" is also true in dealing with credit collecting agencies. Learn what they can and cannot do and what is an unfair collection practice. So, familiarize yourself with the rules and treat this as your ally against online lender harassment and threats.

1. What is an unfair collection practice?

Unfair collection practices are acts that the lenders or their agents cannot do when collecting payments from borrowers. In collecting the amount due to them, lenders must resort only to reasonable and legal means. Or else, there are penalties if they are found liable for unfair collection practices. 

Related article: Beware of Loan Sharks: How to Protect Yourself Against Illegal Lending Practices in the Philippines

2. What are the regulatory agencies that determine unfair collection practices?

For banks, credit card companies, or their collection agencies, it is the Bangko Sentral ng Pilipinas (BSP). It issued BSP Circular No. 454 Series of 2004, requiring banks, credit card companies, or collection agencies to refrain from engaging in unscrupulous or untoward acts. It also enumerated the list of those that are considered unfair collection practices (threats, insults, contacting before 6:00 a.m. or after 10:00 p.m., etc.). 

For Financing Companies (FCs) or Lending Companies (LCs), it is the Securities and Exchange Commission (SEC) that regulates them. In 2019, it issued SEC Memorandum Circular No. (MC) 18,[2] listing down conducts that are considered unfair collection practices. The list is also the same as those prohibited in BSP Circular No. 454.

3. What conducts of FCs and LCs would be considered unfair collection practices under SEC MC 18?

  • Using or threatening violence to harm the borrower, his or her reputation, or property.
  • Using threats to take any action that cannot legally be taken. 
  • Using obscenities, insults, or profane language.
  • Disclosing or publishing the names and other personal information of borrowers for allegedly refusing to pay debts (except those allowed under Section 2 of MC 18).
  • Communicating or threatening to communicate to any person the loan information, which is known, or should be known, is false (except those instances allowed under Section 2 of MC 18).
  • Using false representation or deceptive means to collect any debt or obtain information about a borrower.
  • Contacting before 6:00 a.m. or after 10:00 p.m. except:
  • i) if the account is past due for more than 15 days; or
  • ii) the borrower gave express consent that only those times are reasonable or convenient opportunities for contact. 
  • Contacting the persons in the borrower’s contact list (except the guarantors or co-makers).

4. Can a collecting agent contact the persons in the borrower’s contact list if the borrower gave consent? 

No. Under SEC MC 18, even if the borrower gave consent, the persons in his/ her contact list (except for the guarantors or co-makers) cannot be contacted. Or else, such an act constitutes unfair debt collection practice. 

Similarly, the National Privacy Commission (NPC) has issued Circular No. 20-01, titled Guidelines on the Processing of Personal Data for Loan-Related Transactions, which prohibits online lenders from accessing contact lists or email lists for debt collection to harass the borrower or his/ her contacts. 

For violations of data privacy, these fall within the jurisdiction of the NPC based on the Data Privacy Act. You may check the NPC website for more information.[3] 

5. Are FCs or LCs still liable for unfair collection practices even if they already outsourced their collection activities?

Yes. Even if SEC MC 18 allows the outsourcing of collection of payments to a third-party service provider, the ultimate responsibility for collection practices and compliance with SEC MC 18 is still with the FCs or LCs.

6. What are the penalties for unfair collection practices?

Any violation of SEC MC 18 shall subject the FCs and LCs to the following penalties:

PenaltyLending CompaniesFinancing Companies
First offense₱25,000₱50,000
Second offense₱50,000₱100,000
Third offenseAny of the following:
  • Fine of not less than twice the fine for the second offense but not more than 1 million
  • Suspension of lending and financing activities for 60 days
  • Revocation 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 million
  • Suspension of lending and financing activities for 60 days
  • Revocation of Certificate of Authority to operate as an FC or LC

7. How to know if the online lender is registered with the SEC?

The SEC has posted the list of online lending platforms on its website.[4] LCs and FCs with revoked licenses or Certificates of Authority are also posted on the SEC website.[5] 

Last November 2021, the SEC issued the SEC MC 10 series of 2021, imposing a moratorium that no new online lending platforms will operate in the country. It says that this was due to the numerous complaints that the SEC received relating to alleged violations by online lending platforms. 

According to SEC MC 10, there is a need to closely monitor and assess the operations of existing online lending platforms to promote lending and financing businesses while ensuring the protection of consumers in the Philippines.

The SEC requires LCs and FCs that are offering online loans to report it to the SEC no later than 10 days before the operations of the online lending platform. Otherwise, this is a violation of SEC MC No. 19, and there are penalties for this. 

8. Can a borrower's photo be used to embarrass him or her to collect a delinquent loan?

No. This violates NPC Circular No. 20-01,[6] which provides that a borrower’s photo can be used only for Know Your Client (KYC) purposes. It expressly provides that in no way shall the borrower’s photo be used to harass or embarrass him or her to collect an unpaid online loan in the Philippines. 

Step 3: Arrange

unpaid loan in the Philippines - How do I report harassment

You may find yourself deleting text or email messages sent by the collecting agent who has been harassing or threatening you. Don’t

Arrange and prepare these messages as evidence of the harassment or threats. Make sure that you put all the evidence and be as detailed as possible. 

Filing a formal complaint before a regulatory agency or a court is like baking. Before you begin, you have to make sure that you have all the ingredients with you.

In this case, you must have all the proof against the lender or collecting agent who is harassing or threatening you. Complaints that are filed in court or regulatory agencies that do not have enough information to support the allegations are likely to be dismissed. 

Filing a formal complaint before a regulatory agency or a court is like baking. Before you begin, you have to make sure that you have all the ingredients with you.

Step 4: Pursue

unpaid loan in the Philippines - Where can I report online harassment lending

Once you are armed with the information about your rights and your supporting documents, you can pursue filing a formal complaint with the regulatory agency (SEC, BSP, or NPC) to stop these lenders or collecting agents from abusive practices. 

If it is a bank or a non-bank financial institution under the supervision of the BSP, you may file it with the BSP. You can find the list of banks and non-bank financial institutions on the BSP’s website.[7] 

For complaints against FCs and LCs, this may be filed with the SEC. You can download a copy of the complaint form from the SEC website.[8] You must fill out this Complaint Form with all the documents, evidence, and proof to support your complaint and a valid government-issued ID. 

As pointed out in Step 1, you must provide evidence or proof that you have reached out to the company or exhausted all the remedies against it before filing your complaint with the SEC. 

Same with the BSP and NPC, the SEC also allows the filing of complaints via email. The SEC has likewise created a tutorial video to help borrowers easily understand the requirements for filing complaints against FCs and LCs. The SEC continuously intensifies its crackdown on abusive lending companies that engage in threatening or insulting borrowers.  

Final Thoughts

Know your rights so that you can insist on being treated fairly. Reading articles such as this is a good start. There may have been horrifying stories about online lenders who harass or threaten borrowers with an unpaid online loan in the Philippines. But there are also those with a good mission and are not out there to make you their prey. 

Keep an eye for red flags, and always ensure that you are dealing with reputable online lenders in the Philippines. As with other challenges in life, debt problems can take a toll on mental health, but trust that you can surpass this. 

Email Us Your Questions!

Got questions about managing debt and loan payments? Email them to askmoneymax@moneymax.ph (with this subject line: Ask Moneymax), and we will try to address them in one of our next articles.

Editor’s note: This is the third in a series of articles helping Filipinos manage debt in the new normal. Stay tuned for more information and advice from the Ask Moneymax column!

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Aileen worked in the public sector for 10 years and previously as a tax and corporate lawyer. In her recent stint, she was involved in implementing credit data submission of financial institutions in the Philippines, championing good credit history and responsible borrowing for consumers. She was a part-time faculty member for seven years, teaching business law subjects on credit transactions, corporate, and sales. Aileen is completing her master’s degree in International Economic Law at the Ateneo de Manila University. She is a consultant, lecturer, and advocate of financial literacy for Filipinos. Follow Aileen on LinkedIn.