Senate probes abusive online lending firms

The Senate has launched an inquiry into the aggressive and abusive debt collection practices of online lending companies following a surge in complaints from distressed borrowers.

Presiding over the hearing on Thursday, Senator Raffy Tulfo, chair of the Subcommittee on Banks, Financial Institutions, and Currencies, stressed the need to stop these unethical tactics.

“This has to stop! Although I still believe that debts should be paid… it’s not something we should resort to with violence,” Tulfo said.

The investigation was prompted by Senate Resolution 746, which highlights allegations of public shaming, libelous social media posts, and even threats involving coffins and death. These actions, Tulfo noted, violate Republic Act 10173, or the Data Privacy Act of 2012.

He also cited a Securities and Exchange Commission (SEC) memorandum prohibiting lenders from using threats or contacting people in a borrower’s contact list unless they are co-makers or guarantors.

Despite past raids on rogue lending firms, many continue to operate and evade prosecution, Tulfo lamented.

Senator Sherwin Gatchalian also raised concerns over excessive interest rates and unfair lending practices.

“There’s no financial institution that charges 50 percent as interest rates and deductions,” he said, adding that borrowers often face harassment over minimal delays in payments.

The committee also tackled issues of forgery in bank transactions and complaints against certain pawnshops, as senators vowed stricter oversight on the financial sector to protect consumers.