Relief for harassed borrowers

Hard-up borrowers already at their wits’ end trying to scrape together enough money to pay their debts caught a much-needed break last week when the Department of Justice warned online lending companies against employing unfair debt collection practices and cyber harassment.

The DOJ Office of Cybercrime (OOC) said in a public advisory issued April 23 that online lending and financing companies are criminally liable for employing illegal means to strong-arm debtors into paying their debt.

What are these illegal practices? Accessing the debtors’ phone book/contacts list to send them messages about the delay or failure to pay debts, for one. Also, shaming borrowers by posting their personal and sensitive personal information online; threatening them with death or physical injuries if they fail to settle their account balances; and use of profane language through text messages directly sent to the debtors and to the debtors’ references to shame them.

“Due to the increasing number of reports received and endorsed to the [DOJ-OOC] involving unfair debt collection practices and cyber harassment committed by online lending companies (OLCs), the DOJ-OOC issued a Public Advisory dated 23 April 2021 enumerating the acts that would qualify as unfair debt collection practices and cyber harassment, and the corresponding violations that victims may file before the appropriate government agencies,” the DOJ said.

Charito A. Zamora, officer in charge of the DOJ-OOC, listed down in the advisory the actions that victims of overzealous collectors can take under various laws—the Cybercrime Prevention Act of 2012, the Data Privacy Act of 2012, the Revised Penal Code, and the Securities and Exchange Commission Memorandum Circular No. 18, Series of 2019—and the government agencies they can run to.

The National Bureau of Investigation-Cybercrime Division (NBI-CCD) and the Philippine National Police-

Anti-Cybercrime Group (PNP-ACG), for example, can investigate cases involving threats of violence and the use of obscenities, while the National Privacy Commission (NPC) oversees cases of malicious disclosure or publication of names and other personal information of tardy borrowers.

Punishments include imprisonment of prision mayor or a fine of at least P200,000 for illegal access to a debtor’s phone book or contacts list; and imprisonment of up to three years and a fine of at least P500,000 for unauthorized use of personal information.

Complaints may also be filed with the Securities and Exchange Commission, which in 2019 issued its own memorandum circular penalizing unfair debt collection practices. The SEC said these include the use of obscenities, insults, or profane language; publication of the names and other personal information of the borrowers; and the use of any false representation or deceptive means to collect or attempt to collect any debt or to obtain information concerning a borrower.

Financing and lending companies found violating the circular face penalties ranging from P25,000 for lending companies and P50,000 for financing companies for the first offense, to P50,000 and P100,000 for the second offense, and up to P1 million for repeated offenses. They also face possible suspension of lending and financial activities for 60 days, or even outright revocation of their authority to operate as a financing or lending company. The SEC issued the circular in 2019 after likewise receiving numerous complaints against financing and lending companies said to be harassing borrowers by employing abusive and unethical means to collect debts.

“To combat or prevent the further commission of unfair debt collection practices and cyber harassments, the DOJ-OOC also encourages the public to report erring OLCs to the NBI-CCD, PNP-ACG, NPC and the SEC,” the DOJ added.

With the COVID-19 pandemic leaving millions of workers either jobless or with reduced pay due to quarantine measures that have adversely affected thousands of companies, the number of borrowers who will fall behind on their payments will only rise.

Certainly, financing and lending companies as well as the third party collection agencies they hire are well within their rights to use all reasonable and legally permissible means to collect debts due them under legal loan agreements.

The SEC emphasized, however, that in the exercise of their rights to collect what is due, “they must observe good faith and reasonable conduct and refrain from engaging in unscrupulous and untoward acts,” especially now that the COVID-19 pandemic and the country’s economic crisis continue to wreak havoc, preventing millions of Filipinos from going back to work and regaining some measure of stability and breathing space in their finances.

Shaming, threatening, and harassing them are against the law, and will not get lending companies any closer to getting their money back.