4 online money lenders told to stop operations
The Securities and exchange Commission (SEC) has ordered four online money lenders to stop offering and providing loans to the public, as they do not have a license and they employ abusive collection practices.
The SEC issued the cease-and-desist order against Cashab, Cashocean, Kwikpeso and Little
Cash, together with their owners, Cashab Lending Co., Mimosa Credit Ltd. and Zamoya Credit Ltd.
The order was released on April 14 during the SEC'S en banc session.
The SEC directed the online lending operators to stop their online operations and the advertising of their products.
Cashab, Cashocean, Kwikpeso and Little Cash have offered and provided loans to the public without a validly subsisting Certificate of Incorporation and Certificate of Authority to Operate as a Lending or Financing Company from the SEC.
The SEC noted that the online lending operators also employ abusive practices to collect money from their clients, which constitute unfair debt collection practices prohibited under a 2019 SEC memorandum circular.
The online lending operators' mobile phone applications gain access to personal information stored in borrowers’ mobile phones, including social media accounts, contact numbers and email addresses.
The operators then use such information to exact prompt payment. They would send a text blast to the borrower’s contacts to inform them about the borrower’s indebtedness and their supposed refusal to pay the amount due.
In other cases, the borrower would be threatened with legal action or public shaming.
“The Lending Company Regulation Act of 2007 was enacted to prevent and mitigate, as far as practicable, practices prejudicial to public interest,” the SEC said in their order.
“The abusive collection practices, misrepresentations, and unreasonable terms and conditions imposed by the online lending operators and their agents and representatives exemplify the practices that as a matter of policy, the State seeks to prevent,” it added.
Section 4 of Republic Act (RA) 9474, or the Lending Company Regulation Act of 2007, requires that a lending company be established only as a corporation. It further provides that no lending company shall conduct business unless granted an authority to operate by the SEC.
Any person who shall engage in the business of lending without a validly subsisting authority to operate from the SEC may face a fine ranging from P10,000 to P50,000 or imprisonment of six months to 10 years or both, under Section 12 of the Lending Company Regulation Act.
RA 5980, or the Financing Act of 1998, punishes the act of engaging in the business of a financing company without the requisite authority from the SEC with a fine of not less than P10,000 and not more than P100,000 or imprisonment for not more than six months or both.