SEC Memorandum Circular No. 18 (2019): Prohibition on Unfair Debt Collection Practices

Summary

SEC Memorandum Circular No. 18, Series of 2019, governs how financing companies (FCs), lending companies (LCs) and the third-party service providers they hire may collect. Section 1 permits all reasonable and legally permissible means, then enumerates eight practices that are unfair: threats of violence; threats to take action that cannot legally be taken; obscenities whose natural consequence is to abuse the borrower; disclosure or publication of borrowers' names and personal information; communicating loan information known to be false — including FAILING TO SAY THE DEBT IS DISPUTED; false representation or deceptive means; contact before 6:00 A.M. or after 10:00 P.M. unless the account is past due more than FIFTEEN days or the borrower consented; and, notwithstanding the borrower's consent, contacting persons in the borrower's contact list other than named guarantors or co-makers. Section 2 makes borrower data strictly confidential subject to a closed list of six exceptions. Section 3 makes a collection agency the FC/LC's agent and leaves ultimate responsibility with the FC/LC. Section 4 requires collectors to disclose their true identity. Section 5 sets the penalties — for a financing company ₱50,000, ₱100,000, then up to ₱1,000,000 or 60-day suspension or revocation of the Certificate of Authority — counted per loan transaction per complainant, and payable to the Commission rather than to the complainant.