Before you borrow: Things to look out for in online lending apps

Fintech lending has filled a gap left by traditional banks, but easy access comes with risks—data misuse, hidden fees, and harassment among them. 

Here’s how to protect yourself from predatory apps and what to do when abuse happens.

As lending apps fill the credit gap left by traditional banks, their convenience has made borrowing faster and easier for millions of Filipinos. But the growing reliance on these platforms also comes with risks—from hidden fees to data misuse and harassment. 

A report by loan agency Digido found that lending apps were downloaded 127.69 million times in 2024, up 42.4% from the previous year, with over 58% of Filipinos—or 67.84 million people—using at least one app to borrow money or cover expenses.

The numbers are no surprise for a population where 80% of adults do not qualify for traditional bank loans, according to the Foundation for Media Alternatives. But while fintech has improved access to credit, the lack of regulation in some corners of the sector has exposed borrowers to risks ranging from data misuse to harassment.

Before borrowing from these apps, watch out for these red flags that may indicate unreliable or predatory behaviors from lenders.

Data grabs and privacy risks

If a lending app asks for access to your contacts, photos, messages, or location, consider that a warning sign—there’s no reason for it to need that information.

Before providing any personal information—other than an email address, mobile number, and valid ID—check whether that data is essential to the loan process. Apps that demand broad permissions may use them for data mining or harassment.

Often, a lending app may reach out to contacts in the phonebook to pressure and harass the user into fulfilling late payments. The same tip applies to sharing social media usernames. Legitimate lending firms communicate only through official channels—text, email, or verified phone calls.

Some services, such as BillEase, may ask for payment slips and tax documents to confirm the user’s identity and capacity to pay back the borrowed money. These are normal verification steps, but always ensure the purpose of the request is clearly stated.

As a security measure, avoid using single sign-on (e.g., linking your Gmail) or connecting social media accounts. Doing so may expose unrelated personal data, which rogue apps can exploit for blackmail or threats.

Hidden charges and unclear terms

A reliable lending app should provide sufficient information about its services for users to make sound decisions. Vague or missing details may indicate weak governance or oversight.

Check how much daily penalties are for late payments, and how much and how frequently interest is charged (i.e., daily, weekly, monthly, annually). If additional fees are charged for instant disbursement or administrative services, make sure these are clearly disclosed in the breakdown of payables.

In some cases, such information will only appear in the terms and conditions. While it’s important to read the fine print, be cautious of apps that hide key details—such as interest rates or repayment schedules—within legal disclaimers.

Be on the lookout for apps without clear borrowing limits. Setting very high ceilings that change frequently may be a tactic to entice users to borrow more and more to the point of unmanageable debt.

Make sure the app has a customer service contact or portal for concerns. Despite late payments, some users are able to negotiate fees with customer service representatives for reliable lending apps. The absence of such channels suggests poor accountability.

To minimize potential risks, use the SEC Check App to verify if the company is registered with the Securities and Exchange Commission. Registered entities are required to comply with national lending and data protection laws.

Aggressive collection tactics

Though resorting to lending apps often arises from urgent or emergency situations, it is still important to take time in assessing the credibility of the service and checking reviews from other users.

If there is even one credible complaint of harassment due to late payments, avoid the app entirely. Patterns of public shaming, doxxing, or intimidation often point to unregulated operations.

Some may even threaten legal action for late payments and borrowing past limits. If these warnings are issued via SMS or phone call, they hold no legal weight and are meant to intimidate. Actual legal action should be coursed through physical documents and done by a lawyer.

Content creator Thara Fajardo, who experienced harassment from lending apps, also advised keeping documentation of any threats—screenshots of text messages, proof of payment, or loan applications.

“[These apps] were eventually removed from the Google Play Store and Apple App Store, and I was also able to renegotiate my payment with some of them,” she told radar in Filipino.

Well-managed lending firms invest in repayment flexibility and responsible collection systems—not fear-based tactics.

Reporting and recourse

Lending apps that resort to harassment can be found liable for violating the Data Privacy Act, according to Atty. Chel Diokno, who represents Akbayan Partylist in Congress.

Under the law, any lender that threatens to disclose a borrower’s personal information or contacts other people without consent can be held accountable. Such violations can be reported to the National Privacy Commission.

Threats of damaging one’s personal reputation and threatening violence can be reported to the PNP Anti-Cybercrime Group and the NBI Cybercrime Division.

“These threats can be deemed unfair debt collection practices and can be reported to the Securities and Exchange Commission,” Diokno said in a video posted on his TikTok account on February 26, 2023.

The rapid growth of online lending has opened doors to financial inclusion, but also to new forms of exploitation. As regulators catch up with the fintech boom, consumer vigilance remains essential.

Borrowers should treat every loan app not just as a quick fix, but as a financial transaction that demands the same scrutiny as any other business dealing.

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