The Securities and Exchange Commission (SEC) has ordered two online lending firms to pay penalties for violating rules on debt collection and transparency in loan terms.
In separate orders released this month, the SEC’s Financing and Lending Companies Division (FinLend) penalized Link Credit Lending Investors Inc. and LHL Online Lending Inc.
In a July 18 order, FinLend imposed a P1 million penalty on Link Credit Lending, which operates under the names iPeso and Pesoin, for violating SEC Memorandum Circular No. 18, Series of 2019.
The circular prohibits unfair debt collection practices by lending and financing companies.
The SEC said it received more than 200 complaints against the company between September 2022 and March 2023. Four of those complaints were the subject of the SEC’s investigation.
The SEC found that Link Credit Lending sent borrowers abusive and insulting messages and issued threats to contact their emergency contacts and co-workers if they failed to repay their loans.
“[C]onsidering the facts, circumstances and gravity of the offense committed by [Link Credit Lending], [FinLend] finds that the monetary penalty of [P1 million] is proper and precise,” the order stated.
The SEC also issued a stern warning that any future violations would be dealt with more severely.
In a separate order also dated July 18, the SEC fined LHL Online Lending, which operates as Pautang Online and Pautang Peso, P129,000 for violating Republic Act No. 3765, or the Truth in Lending Act.
The law requires lenders to provide borrowers with clear and accurate loan information before finalizing a transaction. Jenniffer B. Austria
FinLend found that LHL Online Lending misled borrowers by stating repayment terms of 150, 180 or 210 days in disclosure statements, but then required repayment in a much shorter period.
Borrowers who failed to meet the shorter deadlines faced hidden surcharges and added interest.
“The intent of the law, which is to ensure that borrowers are well-informed about the agreements they enter into, has been undermined by [LHL Online Lending’s] deceptive practices,” the order read.
“Worse still, borrowers were misled into agreements through misleading information that made them appear to be wise choices, when in fact, they were not.”
The SEC warned that repeated violations could result in the cancellation of LHL Online Lending’s registration and certificate of authority to operate.
