Online lenders face jail term for shaming borrowers – NPC

MANILA, Philippines — Officials of three online lending firms may face imprisonment and fines for alleged public shaming of borrowers, which is in violation of the Data Privacy Act of 2012, the National Privacy Commission (NPC) said.

At a press conference yesterday, NPC commissioner Raymund Liboro said they have completed their investigation on Fast Cash Global Lending Inc., which operates the Fast Cash app; Unipeso Lending Co. Inc., behind the CashLending app; and Fynamics Lending Inc., which operates the PondoPeso app; and are recommending criminal prosecution of the board members of the three firms, whose business model was found to be based on principles that go against the Data Privacy Act.

The NPC is filing charges against Fast Cash Global Lending’s directors and board members Kellon de Jesus Manalastas, Tiancai Huang, John Christian Sia, Jovy Co Ting and Zichao Su; Unipeso Lending’s executives Haolong Li, Guanqun Luo, Flordeluna Rosell, Rizza Mae Lorilla and Renyvic Duquitan; and Fynamics Lending’s officers Meng Li, Changjin Wang, Kwinnie Mae Fianza, Jacquielyn Chua Garrido, Helen Joy Amican de Luna and Bernard Salvacion Jr.

The officials may face imprisonment of up to seven years and be subject to fines not more than P5 million under the law.

The NPC’s fact-finding investigation established that the three online lending firms have not complied with legal requirements for processing personal data; had failed to adhere to the principles of transparency, legitimate purpose and proportionality; and committed unauthorized processing; processing for unauthorized purpose; malicious diclosure and unauthorized disclosure.

Liboro said the companies operate on a business model where the only way to collect from delinquent borrowers is to shame them. The probe was conducted as 61 percent of the complaints received by the agency involved the three firms.

The NPC said that as of July 31, the number of complaints filed against Fast Cash reached 166, 138 for Unipeso and 133 for Fynamics.

“The investigation determined that their business practice specifically targets the privacy of persons, practically making a profit out of people’s fear of losing face and dignity. These unethical practices simply have no place in a civilized society and must stop,” he said.

Complaints received by the NPC reported the use by the lending firms of borrowers’ contact list without consent or authority; disclosure of unwarranted or false information to other persons; use of personal information for harassment and unduly intrusive personal data processing.

Liboro said that the lending apps had very invasive capabilities and were able to retrieve the users’ phonebook contacts.

“They called up the relatives, the friends and, in one instance, the employer of a delinquent borrower,” Liboro told The STAR.

The apps were also able to access the archives of the smartphone of borrowers, allowing them access to personal photographs which the lending companies used in their shaming of those who went delinquent on their loans.

“What we’re talking about here is the practice of shaming, and the illegal and unauthorized use of personal information. That is illegal. That’s very clear here,” Liboro said.

“It reveals a business model founded on principles violative of the Data Privacy Act, business models which make use only of shaming to collect payments from their delinquent borrowers,” he continued.

“(The) report found that the penalties inflicted on borrowers by these online lenders are abusive. The public shaming they carried out has caused anxiety, depression; some have even lost jobs and feel they became unemployable, that their reputation and future were put in jeopardy. The permanence of these damages is disproportionate to the mere delinquency in paying debts, sometimes as low as P1,000,” Liboro said.

While borrowers need to settle their loans, he said they should not be subject to these sanctions from online lenders.

The NPC is giving executives of the three online lending apps 10 days from the date of receipt of the notice to respond to the allegations and findings. – With Rainier Allan Ronda