The Securities and Exchange Commission issued a cease-and-desist order against four online lending companies that are allegedly operating without a license from the corporate regulator.
The SEC issued the order on April 14 against CashAB, CashOcean, KwikPeso and Little Cash, along with their owners, CashAB Lending Co., Mimosa Credit Ltd. and Zamoya Credit Ltd.
The SEC also directed the online lending operators, their agents, representatives and promoters, as well as the owners of their hosting sites to immediately stop or face contempt.
The SEC ordered the online lending operators to cease from offering and advertising their lending business through the internet and remove their promotional presentations and offerings, including their lending apps.
CashAB, CashOcean, KwikPeso and Little Cash, according to the SEC, offered and provided loans to the public without a valid certificate of incorporation and certificate of authority to operate as a lending or financing company from the regulator.
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 should conduct business unless it has an authority to operate from the SEC.
Any person who engages in the business of lending without an 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.
Aside operating without the necessary licenses to operate, the online lending operators failed to disclose certain information in their advertisements and online platforms as mandated by SEC Memorandum Circular No. 19, Series of 2019.
The online lending operators also employ abusive collection practices. After gaining access to the personal information stored in the 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 then send a text blast to the borrower’s contacts to inform them about the borrower’s indebtedness and the supposed refusal to pay the amount due.
“The Lending Company Regulation Act of 2007 was enacted to prevent and mitigate, as far as practicable, practices prejudicial to public interest,” SEC said.
“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.