SEC shutters 12 online lending firms

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    The Securities and Exchange Commission (SEC) has ordered 12 more companies to stop operations after they were found to be operating online lending activities without a license.

    These are A&V Lending Mobile, A&V Lending Investor, A.V. Lending Corp. , Cashaku, Cashaso, CashEnergy, Happy Loan, Peso Pagasa, Vito Lending Corp., Phily Kredit, Rainbow-Cash and Rainbowcash.Ph Lending Corp.

    “The SEC 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 on their behalf to immediately cease and desist, under pain of contempt, from engaging in, promoting and facilitating unauthorized lending activities,” the SEC said in an Commission En Banc order dated Oct. 10, 2019.

    The Commission also ordered the online lending operators to cease from offering and advertising their lending business through the internet and to delete or remove promotional presentations and offerings of such lending business from the internet including the lending applications that they operate.

    The SEC also said “any and all persons and entities carrying out, abetting or promoting lending business or similar activities without the requisite license to immediately cease and desist from engaging in such lending activities until they have incorporated and have secured the requisite certificate of authority to operate as lending or financing companies.”

    Section 4 of Republic Act No. 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.

    The SEC said an investigation by the Commission’s Corporate Governance and Finance Department (CGFD) found that the online lending applications and their operators are not registered as a corporation or partnership and/or have not been issued certificates of authority to operate as lending or financing companies.

    “In the case of A&V Lending Mobile, the CGFD found no record of the registration of its purported operator, A&V Lending Investor. A certain A.V. Lending Corp. turned up in the SEC database, but its registration has already been revoked,” it said.

    Peso Pagasa and Rainbow-Cash are purportedly operated by Vito Lending Corp. and Rainbowcash.Ph Lending Corp., respectively. However, no such corporations are recorded in the Commission’s database, the SEC said.

    An investigation by the SEC Enforcement and Investor Protection Department (EIPD) meanwhile confirmed the existence and operation of the online lending applications which have been advertising on social media.

    The EIPD further found that the online lending operators have gained access to personal information stored in borrowers’ mobile phones, including social media accounts, contact numbers and email addresses, through their mobile applications, according to the SEC.

    “The online lending operators then used 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 of legal action or public shaming,” it said.

    A number of complainants said the abusive collection practices of the online lending operators, their agents and representatives have caused them “depression and sleepless nights, ruined their reputation and adversely affected their health.”

    “Considering that the online lending operators are not incorporated entities or have no certificate of authority to operate as lending companies or financing companies, the lending activities and transaction are illegal and have to be stopped immediately by this Commission,” the SEC’s cease and desist order said.