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Davao City 1st district Rep. Paolo Duterte has highlighted the need for a law that would regulate the collection practices of debt collectors--including "microloan apps"--in a bid to protect borrowers from abuses, harassment, unfair treatment, and misrepresentations.

For this purpose, Duterte led the filing of House Bill (HB) No.HB 6681, or the proposed Fair Debt Collection Practices Act.

Through the measure, the Mindanaoan aims to protect financial borrowers from public shaming, extortionate interest charges and other vicious online lending practices that continue to victimize people despite a supposed government crackdown against abusive moneylenders.

“More victims have continued to come out to report being harassed, shamed, threatened, and forced to pay usurious interest charges. Both the executive and Congress need to act fast to put an end to these inhumane debt collection practices,” Duterte reckoned.

The absence of a law that would tighten regulation over online moneylenders is among the reasons why abusive debt collectors proliferate in cyberspace, he said.

“Our laws need to catch up with technology, which while providing ease and convenience to consumers, have also given rise to abusive practices that have ruined not only the reputations, but also the lives of their victims,” underscored Duterte.

Duterte noted that the group Philippine Association of Loan Shark Victimdowns Inc. (PALSVI) has gathered over 32,000 signatures so far in their call for the government to shut  about 101 online lending apps (OLAs) that it claims to “threaten, embarrass, intimidate, and cause utter grief to the unfortunate victims.

So-called microloan apps make it easy for borrowers to obtain loans as they do not require collateral and paperwork, and can be processed in as fast as 24 hours.

However, many of these online lenders charge usurious interest rates, with victims reporting that they have received only a fraction of the loan they borrowed, but were required to pay the full amount with interest in less than a week. These onerous conditions were not stated in the terms of the loan.

Under HB No.6681, a debt collector is prohibited from engaging in any conduct that is intended to “harass, oppress, humiliate, or abuse any debtor in connection with the collection of a debt.”

These include the use or threat of violence, or other criminal means; the use of obscene and profane language; and the disclosure,  publication or posting of the names and other personal information of the borrowers who allegedly refuse to pay debts.

The measure prohibits the collection of any amount such as interest, incidental fees and other charges, unless such amount is expressly authorized by the agreement creating the debt  or  permitted by law. It also prohibits false, deceptive and misleading representation in collecting debts.

HB No.6681 also holds debt collectors liable for damages in individual or class action suits if found to have  violated provisions of the measure.