THE Securities and Exchange Commission (SEC) has ordered the shutdown of online lending entities CashAB, CashOcean, KwikPeso and Little Cash for lack of proper documents to do lending business.
The SEC said it has directed the “online lending operators, their agents, representatives and promoters, as well as the owners of their hosting sites and all persons acting for and on their behalf, to immediately cease and desist under pain of contempt from engaging in, promoting and facilitating lending activities.”
Covered by the order are CashAB Lending Co., Mimosa Credit Ltd. and Zamoya Credit Ltd. which operate the lending schemes.
The commission further ordered the online lending operators to cease from offering and advertising their lending business through the internet and to delete or remove their promotional presentations and offerings, including their lending apps.
CashAB, CashOcean, KwikPeso and Little Cash have been offering and providing 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 sid the four violates Section 4 of Republic Act No. 9474, or the Lending Company Regulation Act of 2007, that requires that a lending company to be an established corporation.
“It further provides that no lending company shall conduct business unless granted an authority to operate by the SEC,” it said.
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.
“Similarly, Republic Act No. 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,” the SEC said.
The SEC said aside from lacking the necessary licenses to operate, the online lending businesses have failed to disclose certain information in their advertisements and online platforms as mandated by SEC Memorandum Circular No. 19, Series of 2019.
The commission likewise noted the online lending operators’ “abusive collection practices, which constituted unfair debt collection practices expressly prohibited under SEC Memorandum Circular No. 18, Series of 2019.”
“The online lending operators gain access to personal information stored in borrowers’ mobile phones, including social media accounts, contact numbers and email addresses, through their mobile applications,” it said.
“The online lending 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 his/her supposed refusal to pay the amount due. In other cases, the borrower would be threatened with legal action or public shaming,” it added.
The SEC said the Lending Company Regulation Act of 2007 aims to prevent and mitigate, as far as practicable, “practices prejudicial to public interest.”
“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 said.
