Lending firm raided for ‘sending death threats’ to clients with unpaid debts

A purported illegal online lending company based in Makati City was raided on Friday by agents of the Presidential Anti-Organized Crime Commission (PAOCC) and the Philippine National Police (PNP), amid complaints it is harassing and intimidating its clients who have failed to pay their debts on time.

PAOCC executive director Gilbert DC Cruz said the raid was triggered by numerous complaints that those who have borrowed money from the company are immediately subjected to humiliation via social media and even get death threats once they fail to settle their debts.

Some 250 employees of the company including three foreigners were rounded up during the raid launched by the PAOCC and the PNP Anti-Cybercrime Group under Brigadier General Sydney S. Hernia.

“We have found out that this company is embarrassing their clients by sending unsavory remarks against them to their families, friends and co-workers. Others are even being subjected to death threats once they fail to pay their debts on time,” said Cruz.

The PAOCC official said that among the pieces of evidence recovered inside the raided company was a text blaster machine which contains different subsriber identity module or SIM cards being used to harass or intimidate their targets.

“This company is engaged in unfair debt practices. In fact, they have no license to operate as a lending institution and harassing, even sending death threats to other people is against the law,” said Cruz.

The company employees are now being held for questioning regarding their alleged harassment and intimidation tactics. They will be facing charges only based on pieces of evidence and witnesses.

“Sa mga natatanggap naming reklamo, merong tulad ng abangan mo na yung riding in tandem, malapit na sa bahay mo, isusumbong ka na namin sa barangay, basically pamamahiya at pananakot,” PAOCC spokesperson Winston Casio said.

However, some of the employees denied harassing their clients and claimed that their “collectors” are the ones doing it since they have access to their client’s accounts.

The raid was the latest conducted by government agents on an online lending company in the country, amid a warning from the Securities and Exchange Commission (SEC) against harassment of borrowers who fail to settle their debts.

The SEC has released a memorandum to protect the public against unfair debt collection which includes the use of or the threat of use of violence to harm the person, his or her reputation or property.

“Financing, lending and even micro-lending corporations are hereby warned that any violation shall be dealt with the full extent of the law,” said the SEC, citing provisions of SEC Memorandum Circular No. 18, Series of 2019, which specifically goes after unfair debt collection practices.

In the past, authorities have reported that online lending operators gain access to personal information stored in borrowers’ mobile phones, including social media accounts, contact numbers and email addresses through their mobile applications.

The online lending operators will then use such information to exact prompt payment by sending text blasts to their borrowers’ contacts to inform them about the borrower’s indebtedness and his or her supposed refusal to pay the amount due.

In other cases, the borrower would be threatened with legal action or public shaming.

“The abusive collection practices, misrepresentations, and unreasonable terms and conditions imposed by the online lending operators and their agents and representatives exemplify the practices that as a matter of policy, the State seeks to prevent,” the SEC said.

The SEC likewise warned the public against online lending operators that are offering loans to the public even without a valid certificate of incorporation and certificate of authority to operate as a financing company.

Section 4 of Republic Act (RA) 9474, or the Lending Company Regulation Act of 2007, requires that a lending company be established only as a corporation. It further provides that no lending company shall conduct business unless granted an authority to operate by the SEC.

Section 12 of the law penalizes any person who shall engage in the business of lending without a validly subsisting authority to operate from the SEC. He or she may face a fine ranging from P10,000 to P50,000 or imprisonment of six months to 10 years or both.

Similarly, RA 5980, or the Financing Act of 1998, punishes the act of engaging in the business of financing without the requisite authority from the SEC with a fine of not less than P10,000 and not more than P100,000, or imprisonment for not more than six months or both, the SEC said.