With half of Filipino adults unbanked, more are becoming trapped in debt cycle with illegal online lenders. — Unsplash
MANILA: Melissa thought her financial troubles would disappear with just a few clicks in a Philippines online lending app that promised "fast cash".
Without access to loans from traditional banks to pay her bills, the working student tried an app last month and received money in a number of loans that were instantly approved.
"Because the repayment period was only seven days and the interest was very high, I wasn't able to pay everything on time," said the 25-year-old who lives in Pampanga province, northwest of the capital Manila.
Melissa, who like others interviewed for this article asked for her real name to be withheld, said she fell into a cycle of debt with eight other online lending apps.
"Out of fear, I started doing what they call 'tapal-tapal' – borrowing from one app to another to cover my debts," she said.
Debt collectors bombarded her with aggressive texts filled with insults, warnings that they would "shoot to kill", or threatening to post her picture and contact details online.
She said one online lender edited her picture into obscene images and sent it to the contacts in her phone.
"They also texted my contacts saying false and disgusting things about me, like that I was offering sex to pay my debts," Melissa said.
"It was humiliating and traumatising because they were not only attacking me, but also destroying my dignity and reputation," said Melissa, who now owes more than 80,000 pesos (RM5,800 or US$1,400), four times the Philippines' average monthly earnings.
The companies she used are not on the list of registered online lending platforms in the Philippines.
In a country where around half the adult population does not have a bank account, a growing number are falling prey to unscrupulous or illegal online lenders and facing spiralling debt.
The Presidential Anti-Organized Crime Commission, a government body that investigates criminal syndicates, said that as of July, it was handling around 15,000 cases filed against online lending apps. It said many cases centred on allegations of harassment, threats and excessive interest rates.
A senator has also asked lawmakers to investigate unauthorised online lenders and their "unfair and abusive" debt collection practices, often targeting low-income Filipinos needing emergency cash to pay for essentials.
From 'fast cash' to harassment
Melissa is now part of a user-created community on Reddit dedicated to victims of harassment by online lending apps.
The community of 40,000 members does not indicate whether it was created for users in the Philippines, but has been populated with posts by Filipinos since February last year.
Other members of the Reddit community said the short repayment periods and high interest had meant their debts had also snowballed.
Jane, 33, from southwest of Manila, said threats would arrive even before her bills were overdue.
One creditor emailed a picture of her, taken from the verification scan when she downloaded the app, edited into an obituary and threatened to send it to her friends and relatives.
Twenty-five-year-old Michelle works in a pharmaceutical company and first learned about online lending apps through a YouTube advertisement. She said some creditors inundated her with text messages and automated calls, and sent her fake summonses demanding she appear before officials or the courts.
"They have the right to ask us to pay our dues. But I think the way they reached out to us is very excessive and unreasonable," Michelle said.
All three women said they had received threats of doxxing or posting their personal details, photos, addresses and phone numbers online if they did not pay their bills.
They emailed complaints to the government's Cybercrime Investigation and Coordinating Center (CICC), which said these threats may constitute a crime under Philippine laws.
No complaint, however, has so far progressed into a legal case, as formal charges need to be filed against the companies, said CICC acting executive director Renato Paraiso.
The sad thing was, said Paraiso, that many victims would lodge grievances, but would stop short of filing formal complaints "because of the tedious legal process. They just want the harassment to stop".
Low financial inclusion
Around 37 million, or roughly half of Filipino adults, were unbanked in 2024, among the highest proportion globally, according to the United Nations.
Paraiso said that while online lending apps could help financial inclusion, illegal lenders and harassment had damaged the industry.
As of August, the government has listed 108 registered online lending apps and ordered the closure of seven unregistered online lending platforms.
Instead of government restriction, he said he advocates for self-regulation of the industry.
"But they should make no mistake about it. Whether legal or illegal, excessive collection methods and shaming of consumers violate certain laws, such as the Data Privacy Act. Those are cybercrimes that had nothing to do with collections," the official said.
Melissa said it was important for consumers to keep screenshots and records of abusive messages and report such cases to authorities to help build legal cases.
"I know that I still have debts to settle, but I will not let these abusive companies destroy my mental health," she said. "By reporting, I also feel that I am standing up not just for myself but also for other victims who might be too afraid to speak up." – Thomson Reuters Foundation
