Hands off borrowers’ contact list, lenders told

The National Privacy Commission (NPC) on Wednesday said it has amended the guidelines on the processing of personal data for loan transactions, adding stricter provisions on mobile phone camera and contact list access sought from borrowers.

Privacy Commissioner John Henry Naga said the newly-issued guidelines, which amended the NPC circular no. 2020-01 published on Sept. 14, 2020, further addressed the data privacy concerns amid the prevalence today of online lending.

“NPC circular no. 2022–02 provides amendments that will serve as an added protection to both borrowers and lending companies. The NPC aims for smooth transactions between the two parties, where borrowers are afforded their data privacy rights and lending companies are given the opportunity to ethically conduct their business and establish trust among their customers,” Naga said in a statement.

The privacy commission said lenders may ask for contact list access from borrowers, but this would be subject to certain conditions.

“Online lending applications must have separate interfaces where borrowers can provide character references and guarantors of their own choosing,” the NPC said in its circular.

Lenders may only be provided limited access and only to the minimum extent necessary to allow the borrowers to choose from their phone contact list their character references and guarantors, said the NPC.

The NPC has also required these lending and financing companies, or persons acting as such, to submit a complete list of the names of all publicly available applications owned by them as part of their registration with the commission.

Third-party service providers operating in the Philippines engaged by these firms or individuals are likewise required to register with the NPC.

A number of online lending firms have been blacklisted by the Securities and Exchange Commission due to unfair debt collection practices, including shaming on social media and issuing death threats. In some cases, lenders shame borrowers who could not pay by texting the people on the latter’s mobile contact list.

Camera access

The new circular also tightens the guidelines when lending firms ask for access to the contact list or cameras of borrowers during the loan application process.

While lenders can still ask borrowers for camera access to prevent fraud at the beginning of the loan application or for payment verification, the NPC said this access must be turned off after a photo had been obtained and saved in the app.

Camera access is still allowed for the legitimate purpose of know-your-customer policy.

The privacy commission said that violation in any of the provisions of the circular will lead to the revocation of their registration, subject to due notice and after providing violators the chance to explain.

The NPC circular will take effect 15 days after its publication in the Official Gazette or a newspaper of general circulation.