Manila: A measure has been filed at the House of Representatives to strengthen protections for borrowers against predatory online lending practices. House Bill 10366, filed by Akbayan Party-list Reps. Chel Diokno, Perci Cenda±a, and Dadah Ismula, along with Dinagat Islands Rep. Kaka Bag-ao, aims to put an end to widespread abuses by online lending platforms, including harassment, public shaming, unauthorized use of personal information, hidden charges, excessive interest rates, and deceptive collection practices.
According to Philippines News Agency, the proposed measure stems from a growing number of complaints from victims of abusive lending apps that take advantage of Filipinos facing financial difficulties. Diokno emphasized that complaints against these apps have been increasing at an alarming rate, exploiting borrowers through harassment and other abusive practices.
The bill guarantees borrowers the right to transparent loan terms, data privacy, fair and dignified debt collection practices, and full disclosure of all loan costs. It mandates online lenders to assess a borrower's repayment ability before loan approval and to obtain informed consent for loan terms and personal information processing.
To prevent debt traps, the bill caps the total amount payable on an online loan - including principal, interest, fees, and other charges - at no more than 200 percent of the original principal. It also prohibits hidden charges, misleading loan terms, and automatic loan rollovers without the borrower's informed consent. Abusive collection practices, such as harassment and contacting non-borrowers, are banned.
Violators could face imprisonment of three to six years and fines ranging from P100,000 to P1 million, with harsher penalties for serious harm and illegal operators. The bill proposes the creation of the Victim Compensation Board for Online Lending Abuses (VCBOLA) under the Securities and Exchange Commission (SEC) to hear complaints and award compensation.
A Victim Compensation Fund will allow victims to recover refunds, damages, attorney's fees, and protection orders. The proposal also empowers the SEC to remove or block unlicensed lending apps and strengthens inter-agency enforcement against illegal operators.
