A proposed measure in the House of Representatives seeks to give the Securities and Exchange Commission (SEC) stronger powers to penalize, suspend and shut down online lending platforms accused of using abusive debt-collection practices.
House Bill 9738, or the proposed “Fair Debt Collection and Digital Lending Consumer Protection Act,” was filed by Quezon City 5th District Rep. Patrick Michael Vargas. The measure seeks to address complaints involving harassment, threats, public shaming and other allegedly abusive collection practices by digital lending platforms.
Under the proposed legislation, the SEC would be authorized to impose fines of up to P5 million, suspend or permanently revoke certificates of authority, blacklist responsible corporate officers and issue immediate cease-and-desist orders against lending entities that engage in prohibited collection practices.
The bill would also establish a Verified Collection Identity System, requiring lending companies and third-party collection agencies to register their collection agents and official communication channels with the SEC. Collection calls and text messages coming from unregistered, anonymous or deceptive numbers would be prohibited under the proposal.
The proposed measure goes beyond administrative penalties. Certain abusive collection practices carried out through digital technology could also trigger criminal liability under existing laws, including the Revised Penal Code, the Data Privacy Act and the Cybercrime Prevention Act. In specified cases, the bill proposes that penalties be imposed one degree higher when offenses such as grave coercion, cyber libel or unauthorized processing of private contact lists are committed using digital technology.
The proposal comes as regulators continue to deal with complaints against online lending platforms. In June, the SEC revoked the registration of Delisha Lending Investors and Trading Corp. after finding multiple violations involving lending regulations, reportorial requirements and undisclosed online lending platforms. Several company officers and directors were also fined.
The SEC has separately maintained advisories covering unauthorized online lending platforms and has continued issuing regulatory guidance for lending and financing companies. A government advisory also reminds borrowers that violations of lending and privacy rules can result in administrative sanctions, including fines, suspension or revocation of authority to operate.
HB 9738 is not yet law. It will still have to undergo the legislative process before any proposed new powers, penalties or collection restrictions can take effect.
If enacted, the measure would give regulators another set of tools for dealing with abusive digital lending practices while creating additional compliance requirements for legitimate lending companies and collection agencies.
