Can Online and App Lenders Use Threats When Collecting Debts?

There are many instances when borrowers who borrowed money from online apps and companies are receiving threats when they are unable to pay debts. On many occasions, lenders send messages to the borrowers’ contact list to inform them of the borrower’s debt.

Can Apps and Online Lenders legally operate?

Apps and online lenders can legally operate provided that they follow the Philippine Law on registration and transparency. Business engaged in lending need to register their business in DTI or SEC to legally operate. They are also required to apply for a Business Permit and TIN. Those proceses requires them to provide the name of the owners and their office address. They are also required to observe the the Truth in Lending Act (Republic Act No. 3765).

The Truth in Lending Act (Republic Act No. 3765) is a law that requires lenders to disclose in writing the following:

1. Real amount that the borrower will receive, and
2. Itemized list of all the fees and charges that the borrower will pay.

In other words, there should be no hidden charges during the loan.

Can Online and App Lenders Use Threats When Collecting Debts?

Online and App Lenders cannot use Threats, Intimidation, and Humiliation when collecting debts. The only legal way to collect debt is to send a Demand Letter and file a collection suit in the Philippine Courts. If threats, violence, intimidation, and humiliation are used in collecting debts, the borrower can resort to the courts to protect themselves.

The following are prohibited means of collecting debts:

1. Sending death threats, fake court cases, and threats to harm against the borrower or people known to the borrower;
2. Sending messages to third persons about the borrower’s debt;
3. Repeated calls and messages for the purpose of annoying and harrasing the debtor;
4. Other means of threats, intimidation, violence, and harassment with the purpose of collecting debt.

How Can you Protect yourself from unlawful collection of debt?

for the Collection of Sum of MoThe following are the laws that can protect you in these situations:

1. Securities Exchange Commission (SEC) Memorandum Circular 18, series of 2019
2. Cybercrime Prevention Act of 2012 (Republic Act (R.A.) 10175), or the , particularly, the offenses of Illegal Access and Cyber Libel
3. RA 10173, or the Data Privacy Act of 2012
4. The Revised Penal Code provisions on grave or light threats, grave or light coercions, or unjust vexation, all in relation to Section 6 of RA 10175;

#1. What is prohibited in SEC Memorandum Circular 18, series of 2019

Prohibits unfair collection practices and Disclosure of Confidential Information of borrowers. The Circular, in section 1, prohibits the use of the following in collection:

Subject to exceptions, section 2 of the Circular prohibits the disclosure of confidential information of the borrower such as their names, personal data, and loans. Hence, lenders cannot inform a third person about the borrowers loan without the latter’s consent or lawful order.

The penalty under SEC MC 18 series of 2019 is fine and/or imprisonment of up to 3 years.

#2 Crimes Under Cybercrime Prevention Act of 2012 (Republic Act (R.A.) 10175)

Provides punishment for cyber libel and illegal access of computer data. Cyber Libel is committed with a person insults or degrades another through a computer system or a similar device.

These crimes are punishable by imprisonment or fine.

#3 Data Privacy Act of 2012 RA 10173

Punishes the Unauthorized Processing of Personal Information and Sensitive Personal Information (Section 25), Processing of Personal Information and Sensitive Personal Information for Unauthorized Purposes (Section 28), and Malicious Disclosure (Section 31). This happens when the lenders spreads personal information to third persons such as when they text or call the friends and family off the borrower and inform them that he/she has a loan with them and he/sh is not paying it.

Penalty is fine and imprisonment.

#4 The Revised Penal Code provisions in relation to Section 6 of RA 10175;

Punishes grave or light threats, grave or light coercions, or unjust vexation, when committed through a computer or similar technology.

How to Protect Yourself From Fake Online App Lenders

You may have a lot of crimes that you can sue against them but it will be difficult for you to do that if the companies are fake or if they cannot be located. Before getting any loan, make sure that you do the following:

1. Make the necessary research – Make sure that they have a SEC or DTI registration. You can visit their offices to check if the company you wish to contact is legitimate;
2. Avoid downloading and granting permissions to apps in your phone because they can access all your personal data, including your contact lists;
3. When you are already receiving threats, report them to the cyber crime division of your local PNP or NBI.

Note: It is advisable that you visit a lawyer for consultation before reporting the matter so that they could provide you with specific legal advise. Situations involving financial institutions vary from one person to another and different situations require different approaches.