The Securities and Exchange Commission (SEC) has penalized two online lending firms for questionable lending and collection practices while flagging another for operating an unregistered platform.
In a statement on Tuesday, the SEC said it has imposed a P1-million fine on Link Credit Lending Investors Inc. for doing business under the names and styles of iPeso and Pesoin and for engaging in unfair debt collection practices.
This follows after the SEC’s Financing and Lending Companies Department (FinLend) held Link Credit Lending administratively liable for four counts of violation of SEC Memorandum Circular (MC) No. 18, Series of 2019, which provides for the prohibition on unfair debt collection practices.
FinLend said that it has received over 200 complaints against Link Credit Lending between September 2022 and March 2023. Four of these complaints are the subject of the order.
“Upon investigation, FinLend found Link Credit Lending to be sending messages containing insults that tend to abuse borrowers. It was also found to be sending threats that they would call the borrowers’ emergency contact and co-workers for non-payment of their loans,” the SEC said.
The SEC said that while it allows financing and lending companies, and their third-party service providers to pursue all reasonable and legally permissible means to collect amounts under the loan agreements, it is required that they observe “good faith and reasonable conduct in exercising their rights and duties, and refrain from engaging in unscrupulous and untoward acts.”
“[FinLend] finds that the monetary penalty of [P1 million] is proper and precise,” the SEC said.
The SEC, meanwhile, fined LHL Online Lending for doing business under the names and styles of Pautang Online and Pautang Peso, and P129,000 for misleading loan deals.
LHL was found to be ignoring the indicated loan payment terms in its disclosure statement.
“In reality, however, LHL Online Lending provides its borrowers a shorter period to repay. Borrowers are then subjected to hidden surcharges and interest for failure to pay within the shorter time frame,” the SEC said.
The SEC said that LHL Online Lending violates the Truth in Lending Act (TILA or RA 3765).
The SEC has warned LHL Online Lending that future violations will result in the cancellation of its primary registration and certificate of authority to operate as a lending company.
The SEC at the same time issued a cease and desist order (CDO) against Hinance Lending Investors Corp., doing business under the names HotCash, VI Peso, and KindCash, for operating an unregistered online lending platform (OLP).
The SEC said that Hinance has failed to disclose in its business plan that it owns and operates the OLP, Magic Peso, violating its rules on full disclosure and reporting requirements for financing and lending companies using OLPs.
