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Lending firms warned against accessing delinquent borrowers’ phone, e-mail contacts

lending firms warned against accessing delinquent borrowers phone e mail contacts 816x445 - Lending firms warned against accessing delinquent borrowers’ phone, e-mail contacts

LENDING COMPANIES have been warned about possible privacy violations when they use an app to access a client’s contacts list to spread negative news about delinquent payments, the National Privacy Commission (NPC) said.

The NPC said that last year it received an unprecedented number of complaints about lending companies that accessed contact lists to tell family and friends of borrowers falling behind on payments.

“The online lending entities utilize the contact list from the borrowers’ mobile phones and disclose their unpaid debts to their family, relatives, friends and co-workers,” the NPC said in a statement Monday.

Under NPC’s Circular No. 20-01 signed on Oct. 14, lending and financing companies that have access to borrowers’ contact lists must dispose of the data securely.

The organizations are also banned from requiring permission to access personal information, including copying phone, e-mail and social media contacts.

“In all instances, online lending apps must have a separate interface where borrowers can provide character references and/or co-makers of their own choosing,” according to the circular.

Data permissions will only be allowed when necessary to determine creditworthiness and prevent fraud, and the online apps must prompt the data subject to turn off permissions once these objectives have been met.

The circular also required that personal data must be stored securely; that loan details be written in clear language; and that borrowers must be informed when loan processing activity involves automated processing and credit scoring. The institutions must also implement policies on retaining data for borrowers whose loan applications were denied or have fully settled their loans.

Violators may be fined or imprisoned under the Data Privacy Act.

“We remind online lending operators and businesses to take their customers’ data privacy seriously and deploy adequate security measures,” Privacy Commissioner Raymund E. Liboro said.

“For the public, we hope this circular will help them keep an eye out for red flags while they are in the process of borrowing money from online lenders.” — Jenina P. Ibañez

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