Saturday, September 23, 2023
- Advertisement -
HomeLaws of lifeSEC orders 4 Online Lending Apps to cease operations

SEC orders 4 Online Lending Apps to cease operations

- Advertisement -

BACOLOD CITY, Negros Occidental, Philippines – The Securities and Exchange Commission (SEC) has ordered the operators of four online lending applications to cease and desist from offering and providing loans to the public.

The cease and desist order issued by the Commission En Banc on April 14 covers CashAB, CashOcean, KwikPeso and Little Cash, together with their owners, CashAB Lending Corp., Mimosa Credit Ltd. and Zamoya Credit Ltd., a press release from SEC said.

The SEC 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.

- Advertisement -

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 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.

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.

- Advertisement -

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.

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 of six months or both.

- Advertisement -

Aside from lacking the necessary licenses to operate, the online lending operators 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.

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.

“The Lending Company Regulation Act of 2007 was enacted to prevent and mitigate, as far as practicable, practices prejudicial to public interest,” the Commission En Banc noted in the cease and desist 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.

- Advertisement -
Hannah A. Papasin
Hannah A. Papasinhttp://facebook.com/hannah.mariveles
Writer. Critic. Professor. She started writing since primary school and now has two published textbooks on communication. A film buff, she's a Communication, Media Literacy and Journalism Professor of the University of St. La Salle-Bacolod, and has a Master's Degree in English.
- Advertisment -


- Advertisement -