The digital economy has shown great potential to impact productivity and efficiency. However, it also brings with it significant risks, as opportunists exploit technology to perpetrate scams and offer quick financial fixes that lure countless hapless Filipinos.

As of 2021, the Bangko Sentral ng Pilipinas (BSP) reported that about 34.3 million Filipinos — 44 percent of the population — remained unbanked, which limited their access to financial resources like credit, savings, and insurance, leaving them vulnerable in the economy.

This unfortunate reality led to the establishment of online lending companies that provide quick financial assistance, particularly to low and middle-income Filipinos.

Unlike traditional banks, which require borrowers to provide proof of income, certificates of employment, payslips, and income tax returns to assess their creditworthiness, online lenders have simpler requirements. Aside from having a smartphone and an e-wallet account, borrowers need only to submit a valid identification card and a few contact references or grant access to their phone’s contact list.

While the intent seems noble, especially for online lenders who are registered, authorized, and compliant with the standards set by the Securities and Exchange Commission (SEC) and the BSP, the influx of unscrupulous lenders has tainted the industry. These errant companies have created nightmares for end-users due to short payment terms, exorbitant fees and rates, and abusive collection practices.

On social media platforms like Facebook and Reddit, tens of thousands of borrowers daily share distressing stories of harassment by collection agents. Harassing calls and texts typically start a day before the loan’s due date and escalate within days of missed payments.

According to the Presidential Anti-Organized Crime Commission (PAOCC), at least six individuals took their own lives due to the overwhelming pressure to repay their debts and the fear of reputational damage by these collectors.

These reports prompted President Ferdinand R. Marcos Jr. to launch a nationwide campaign against erring online lenders. The PAOCC leads the investigations together with the SEC, the Philippine National Police, and the National Privacy Commission. Their efforts are focused on addressing the serious issues of the tragic fatalities and the numerous complaints related to data privacy violations and abusive tactics to humiliate borrowers.

So far, PAOCC has received some 15,000 complaints of data privacy violations and unethical collection practices. The SEC has shut down close to 100 online lenders, while PAOCC is working to crack down on hundreds of illegal online lenders.

As a POLL STARTER, consumers should consider loan offerings by state-run firms such as SSS, Pag-IBIG and GSIS for government workers, along with options from traditional and digital banks, as well as e-wallet service providers, which typically offer competitive interest rates, flexible payment terms, and reasonable collection practices.

Despite the government’s effort and proposed laws aimed at protecting consumers, there is no guarantee these measures will prevent illegal practices. As technology advances, opportunists continue to find ways to exploit technology and individuals with enticing promises of quick money to meet their daily needs.

Policies and programs, therefore, must adapt quickly to address these deceptive practices and safeguard the public interest against emerging frauds and scams.