In the Philippines, users of online lending platforms are grappling with a mounting crisis as they report rampant deception, harassment, and overwhelming debt. Lance, a 31-year-old from Manila, finds himself inundated with threatening messages and calls daily, a consequence of borrowing from multiple loan apps during the COVID-19 lockdowns. Despite having secured a better credit rating, Lance has accumulated nearly one million pesos in debt across more than 20 platforms, often relying on bank loans to manage rising penalty fees.
The surge in popularity of loan apps during the pandemic has been dramatic, with unique user numbers skyrocketing by 64% to 47.5 million in 2023, according to digital lending company Digido. While these platforms have provided easier access to credit for the unbanked, they have also been criticized for predatory practices. The Philippine Securities and Exchange Commission (SEC) has licensed 140 digital lending companies but has only revoked the licenses of fewer than 40 for unfair debt collection practices.
Robert Dan Roces, chief economist for Security Bank Philippines, acknowledges the disruptive role of these platforms but highlights the steep price of their convenience. Kikay Bautista, founder of the United OLA (Online Lending Apps) Victims Movement, describes the situation as worsening, with many users falling victim to exploitative practices.
Bobbie, a 22-year-old student, shares his distressing experience with the app MocaMoca. Initially lured by promises of quick loans with minimal interest, Bobbie ended up facing severe penalties and threats after a missed payment. Despite the SEC revoking MocaMoca’s license in April 2023, the platform continues to operate, pending an appeal.
The situation has drawn criticism from various quarters, including the National Privacy Commission (NPC), which in August 2021 ordered the takedown of four platforms for violating data protection laws. The NPC’s intervention led to some improvements, but ongoing investigations into unauthorized data processing continue.
The Philippine National Police’s Anti-Cybercrime Group (PNP-ACG) has also intervened, conducting raids in response to viral incidents of extreme harassment, such as sending funeral flowers to borrowers as threats. However, the effectiveness of these actions remains in question, and the PNP-ACG has reported difficulties in tracking and apprehending perpetrators who often operate from abroad.
As the crisis unfolds, experts like Jay Guillermo of the PNP-ACG stress the importance of fulfilling debt obligations but acknowledge the challenges in enforcing regulations against anonymous and often foreign-owned platforms. For many victims, including the elderly and those with limited internet access, navigating the complaints process remains a significant hurdle.
Bautista calls for more accessible and effective regulatory measures to protect vulnerable borrowers from predatory lending practices and the mental anguish that accompanies them.
