The Securities and Exchange Commission (SEC) issued a cease and desist order (CDO) against 19 lending companies that failed to secure the necessary licenses to operate.
The country’s corporate regulator issued the CDOs following complaints of harassment, invasion of privacy, and high-interest rates against the following online lenders:
- Instant Pera
- Lendmo Philippines
- Crazy Loan
- Flash Cash
- MoneyTree Quick Loan
- Pera Express
According to the SEC, these firms, which are operated by unregistered entities, also lack the required certificate to operate as lending or financing companies and are not registered with the agency as a corporation.
“Based on the findings of the SEC Corporate Governance and Finance Department and Enforcement and Investor Protection Department, the owners and operators of the online lending applications have not secured the required certificates of authority to operate as lending or financing companies. Furthermore, they are not registered as a corporation with the SEC,” said SEC Commissioner Kelvin Lester Lee.
“The commission enjoined the owners and operators of the online lending applications, their agents, representatives and promoters, the owners of their hosting sites and all persons acting for and, in their behalf, to immediately cease and desist from engaging in, promoting and facilitating unauthorized lending activities,” he added.
Because of this, the companies are in violation of the Lending Company Regulation Act of 2007 (RA 9474). Violations of this law incur a P10,000 to P50,000 fine or imprisonment of six months to 10 years.
Investigation showed that customers faced high-interest rates, unreasonable terms, and conditions, misrepresentations as to non-collection of charges and fees, violation of their right to privacy and harassment among other abusive collection practices.
According to the commission agency, the unregistered lenders collected private customer info, such as names and contact numbers, through their respective lending application.
The FinTechAlliance.ph, SEC, the National Privacy Commission (NPC), Bangko Sentral ng Pilipinas, and the Department of Trade and Industry (DTI), among others, have released guidelines protecting consumers from the misuse and abuse of innovations.
Included in the guidelines are prohibitions against the practice of intimidation. They also promote transparency and seek to protect lenders from other malpractices.
Alliance members who provide online lending services are required to disclose interest rates and processing fees. They also need to disclose late payment fees.
The institutionalization of a code of ethics for online lenders was welcomed by Privacy Commissioner Raymund Liboro.
“The NPC recognizes that one important component of successful digital governance is making sure that the legitimate business interests thrive with accountability, compliance, and ethics,” Privacy Commissioner Liboro said in a statement.
As we previously reported, criminal cases have been filed by the NPC against board members of three online lending companies: Fast Cash Global Lending Inc., Unipeso Lending Company Inc., and Fynamics Lending Inc.
There have been 5,000 complaints against online lenders for harassment filed with the NPC. The SEC has also released a list of more than 800 online lenders whose licenses they have revoked. You can check out that story and find a list of those companies in our article here.