THE Philippine National Police Anti-Cybercrime Group (PNP-ACG) has launched a crackdown on online lending firms harassing and threatening their borrowers thru social media or text messages as soon as they are unable to pay their loans within the prescribed period, the Journal Group learned yesterday.

Last week, agents of the PNP-ACG headed by Brigadier General Robert T. Rodriguez raided a Chinese-owned office in Pasig City whose employees have been accused of harassing borrowers who have failed to pay their debt on time and arrested the foreigner and his 45 Filipino employees, a report to PNP chief, General Dionardo B. Carlos said..

“The suspects have long been the subject of numerous complaints from hundreds of people who have borrowed money from the company. Thru their call center-like operations without any government permit, pinapahiya nila ang mga borrowers na hindi agad nakakabayad sa kanila sa mga relatives and friends nila thru text messages or sa social media,” said Brig. Gen. Rodriguez.

The arrested owner of the raided company identified as Shihai Dao is now facing charges for misuse of device and violation of Republic Act 9474 or the Lending Company Regulation Act under RA 10175 or the Cybercrime Prevention Act of 2012.

It turned out that the company is engaged in so-called ‘debt-shaming’ in which its employees threaten their debtors with death and physical injuries or embarrass them if they fail to settle their accounts balances. The company employees were accused of sending profane text messages directly to their debtors and their references and other relatives and friends in order to shame them.

Last year, the Department of Justice (DOJ) stressed that harassing people who took a loan from online lenders — like posting the debtor’s sensitive details and shaming them online — is an illegal act that may be punished under the current law.

The DOJ also released a list of things that constitute cyber harassment of debtors amid numerous reports about online lenders doing unfair debt collection and online debt-shaming.

The department said that the following actions may be liable under Republic Act No. 10175 or the Cybercrime Prevention Act of 2012, R.A. No. 10173 or the Data Privacy Act of 2012, Revised Penal Code in relation to Section 6 of R.A. No. 10175, and the Securities and Exchange Commission (SEC) Memorandum Circular No. 18, series of 2019:

Accessing the debtors’ phone book/contacts list for purposes of sending them messages in the event of untimely and/or non-payment;

Posting the debtors’ personal and sensitive personal information online for purposes of shaming them;

Threatening debtors with death and physical injuries if they fail to settle their account balances; and

Using profane language through text messages directly sent to the debtors and to the debtors’ references for purposes of shaming them.

The government decided to take action against online debt-shaming and other forms of cyber harassment of debtors amid numerous complaints from online debtors who have been shamed by the lenders in various ways. The complainants are mostly users of online short-term or payday borrowing methods.

The usual complaint is that the erring lending firms have illegally tapped their borrowers’ contact details in order to shame him/her regarding his failure to pay the money he borrowed on time. Many poor victims have cried in shame after being victimized by the same modus operandi.

Officials said that people who have and may become victims of debt-shaming can file complaints before the National Privacy Commission especially if the violation centers on date privacy.

The PNP-ACG is one of the law enforcement units mandated to investigate such violation while the SEC will take over if the violator is a registered only lending company.

Brig. Gen. Rodriguez told the Journal Group that the Chinese national and his 45 Filipino employees were arrested for committing the offense. The Chinese was identified as the boss of the Cash Trees Lending Corporation which is running a number of online lending apps.

Ten of the lending apps were identified as “Happylend, Rush Loan, Easy Money, Good Pocket, Lucky Star, Swipe Cash, 365 Cash, Mega Loan, Treecash, and Goldpeso.”

PNP-ACG investigators discovered that the terms and conditions of the applications allegedly contained a clause that granted the firm access to clients’ contacts — a requirement for taking out a loan. Once approved by the borrower, the firm is then said to save the contacts into its database.

Once the debtor fails to pay on time, the company which is operating a ‘call center-like office’ being manned by its Filipino workers will harass their borrowers who mostly come from low-income households and jobless Filipinos with expletives and even threaten to kill or rape them.

The victims who mostly can’t pay on time due to high interest rates demanded by the lending firm, are also shamed before their friends and relatives thru social media and text messages.

Collecting agents hired by the company have also been reported to encourage borrowers to make other loans with their different loan applications for them to make a repayment, in the process burying them in debt.

“The suspects have long been the subject of numerous complaints from hundreds of people who have borrowed money from the company. Thru their call center-like operations without any government permit, pinapahiya nila ang mga borrowers na hindi agad nakakabayad sa kanila sa mga relatives and friends nila thru text messages or sa social media,” said Rodriguez.

According to the PNP-ACG director, officers from their Cyber Response Unit led by Lieutenant Colonel Jay D. Gullermo and their Digital Forensic Unit under Lt. Col. Zaldy K. Abellera raided the office locaed at the 10th floor of Strata 100 in Barangay San Antonio, Pasig City 2 p.m. last February 12 on the strength of a Warrant to Search, Seizure and Examine Computer Data or WSSECD issued by Judge Rainelda Estacio-Montesa of the Manila Regional Trial Court Branch 46 .

The warrant was issued following a complaint for violation of Section 4 (a) or Misuse of Device under RA 10175, the top PNP cybercop said.

Brig. Gen. Rodriguez said these lending/loan apps have no Certificate of Authority from the SEC. Representatives from the SEC’s Enforcement and Investor Protection Department and the Pasig City Police Station assisted the PNP-ACG men in the conduct of the raid.

“I remind the public, to be cautious, and to take measures before engaging in online transactions to avoid being victims of this online fraud,” Rodriguez said.

According to the official, lending firms caught practicing such methods may be fined P25,000 to P1 million, along with the revocation of their certificate of authority to operate.

The National Privacy Commission last year said it has ordered the closure of 26 online lending companies for involvement in the said irregularity.