AKBAYAN Party-list Thursday filed House Bill 10366 that mandates protections for borrowers against abusive online lending practices.
Filed by Representatives Chel Diokno, Perci Cendaña, Dadah Ismula, and Dinagat Islands Rep. Kaka Bag-ao, the measure aims to require online lenders to provide transparent loan terms, protect borrowers’ data privacy, ensure fair debt collection practices, and fully disclose all loan costs. It prohibits hidden charges, misleading loan terms, automatic loan rollovers without informed consent, and abusive collection practices such as harassment, public shaming, contacting individuals other than the borrower except in limited cases, and baseless threats of criminal prosecution.
Diokno noted the proposed measure stems from the growing number of complaints from victims of abusive lending apps that take advantage of Filipinos struggling financially.
“Even before I became a lawmaker and until now, complaints against abusive online lending apps keep on coming at an alarming pace. These apps exploit borrowers through harassment, public humiliation, and other abusive collection practices,” Diokno said.
“We must put a stop to these abusive practices once and for all. No Filipino should have to endure these simply because they fell on hard times,” he added.
Under the proposed law, lenders are required to assess a borrower’s ability to repay before approving loans and obtain informed consent for all material loan terms and the collection and processing of personal information.
It seeks to cap the total amount payable on an online loan — including principal, interest, fees, penalties, and other charges — at no more than 200 percent of the original principal.
Under the bill, violators could face imprisonment of three to six years and fines ranging from P100,000 to P1 million, with stiffer penalties for offenses resulting in serious harm or committed by illegal operators.
The measure mandates the creation of the Victim Compensation Board for Online Lending Abuses under the Securities and Exchange Commission (SEC) to hear complaints and award compensation.
Through a Victim Compensation Fund, victims may recover refunds, actual damages, moral damages, exemplary damages, attorney's fees, and protection orders.
The proposal authorizes the SEC to order the removal or blocking of unlicensed online lending apps and strengthens inter-agency enforcement against illegal operators.
“Your personal debt is not a license for online lenders, loan sharks, and their collection agents to harass you, curse you, and demean your dignity,” Cendaña said.
"The proposed measure protects borrowers' rights and holds online lenders to strict standards of transparency and fairness. No Filipino deserves to be shamed in text or on social media just because of their debt," he added.
