6 companies, 32 others face ‘abusive collection’ raps before DOJ

For sending threatening messages in an effort to collect from their borrowers, 6 companies and 32 officials and stockholders are now facing criminal raps before the Department of Justice.

The Securities and Exchange Commission (SEC), on Tuesday, filed complaints for “abusive collection or debt recovery practices” against 3 lending companies, 1 financing company and 2 business process outsourcing (BPO) companies, alleged to have threatened their customers if they are unable to pay their online loans.

Of the 32 other respondents, 3 individuals are from China and 3 companies are from Singapore while the rest are based in the Philippines. They were sued in their capacity as employees, officers or stockholders of the 6 companies, some of whom were caught manning the computers used for harassment.

The complaint said the lending companies require borrowers to download an app on their mobile device which would then seek permission to access the device’s contact list.

“Pag nakapangutang ka na, napakataas ng interest rate na kanilang ipinapataw. Tapos ayon, pag hindi ka nakapagbayad sa exact na oras, magsisimula na yung harassment, mga pamamahiya, pambabastos,” lawyer Oliver Leonardo, director at the SEC Enforcement and Investor Protection Department said.

(Once you secure a loan, they will impose high-interest rates. If you are unable to pay on time, they will start harassing you and shaming you.)

Leonardo said the messages are either sent by personnel of the lending company itself or by a third-party collector, sometimes a BPO.

In one BPO company raided by the Philippine National Police (PNP) Anti-Cybercrime Group last month, an agent warned on Facebook she will post the photos of the borrower’s children online if she is unable to pay while an e-mail sent to another borrower was an express death threat.

“‘Yung threat sa inyong buhay, merong ganyan, sa mga kamag-anakan. Meron ding mga bastos na salita na talagang yung mukha niyo ay ipapakalat at meron po silang ginagawa na malalaswang images at ipinapakalat din po sa social media na kayo ay hindi nagbabayad. Mga ganyan na ipinagbabawal na ngayon sa batas,” Leonardo said.

Financial service providers are barred, under the Financial Products and Services Consumer Protection Act (RA 11765), from employing abusive collection or debt recovery practices against their financial consumers.

Violators face up to 5 years in prison, aside from fines of up to P2 million.

Leonardo said that the liability of lending companies extends to acts of third-party collection agents.

“Anuman ang gawin ng mga ahente, ng mga third-party collection agents, dapat managot din yung mga lending company, financing company behind those. At may mga nag-ooperate din ng mga illegal online lending platforms at kung hindi to narehistro sa SEC, ito po ay isa ring paglabag sa aming regulasyon,” he explained.

One BPO company and some of its officials face an additional complaint for violating the Lending Company Regulation Act (RA 9474) for engaging in lending without authority to operate from the SEC.

Leonardo encouraged victims of online loan sharks to report incidents of harassment to the SEC’s Financing Company and Lending Division.

He reminded them to be responsible borrowers by always checking the SEC website for the list of accredited online lending platforms and the maximum interest rates that may be imposed.

tween co-makers or guarantors who willingly gave their numbers. Because in those instances, then, the situation mentioned by Asec. Mico would come in, that there was consented release. The problem is, there will be instances where the borrower just used a number of your friend without telling anybody or a relative. That would certainly be falling within the violation of the Data Privacy Act,” he said.


Vasquez outlined several liabilities that might arise out of this abusive debt collection practice.

The violation of the Financial Products and Services Consumer Protection Act and the Lending Company Regulation Act, he said, might even be considered the “least” of all the criminal cases that could be filed.

Aside from violation of the Data Privacy Act, he also mentioned “grave threats” under the Revised Penal Code in cases where there are veiled death threats such as sending of a coffin or a wreath, and child abuse in situations where there is a threat of posting the names, the faces and other details of a child in a public space.

“But mind you, the prosecution here is not limited to criminal cases. The more meaningful ones, we believe, should be going after their registration and their license to do business here,” Vasquez said.

“Or if there will be foreigners who are involved, then, immigration issues could be raised as well because their stay here is subject to their compliance with the laws of the Philippines,” he added.

He also mentioned unjust enrichment, in cases where there was no basis for taking the property or funds.

All of these complaints, Vasquez explained, can be simultaneously filed before different government agencies.


But while the justice department expressed concern over harassment committed by lenders, it also reminded borrowers to perform their end of the bargain.

“We have to consider as well the, I would say, the socially unacceptable habit of some people of borrowing and running away from them. But the remedy there is not the things that they’re doing now because under our Constitution, no one should be imprisoned for non-payment of debt. So civil case lang yan. But what they’re doing is weaponizing all these matters in order to force payment,” he said.

The SEC is set to file another case before the DOJ Wednesday, this time against investment companies.

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