The Securities and Exchange Commission (SEC) has ordered the shutdown of four online lending platforms that had been operating without the proper permits, imposing “unreasonable” terms and using “abusive” practices.
The SEC issued the cease-and-desist order (CDO) dated April 14 to CashAB, CashOcean, KwikPeso and Little Cash, together with their owners, CashAB Lending Co., Mimosa Credit Ltd. and Zamoya Credit Ltd.
These entities 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, the SEC said in a statement on Thursday.
Also, these 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 Lending Company Regulation Act of 2007 was enacted to prevent and mitigate, as far as practicable, practices prejudicial to public interest,” the SEC noted in the CDO.
“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.
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, were directed to immediately stop engaging in, promoting and facilitating lending activities.
The SEC further ordered the online lending operators to stop offering and advertising their lending business through the internet and to delete or remove their promotional presentations and offerings, including their lending apps.
The Lending Company Regulation Act requires that a lending company be established only as a corporation. It further provides that no lending company may conduct business unless granted an authority to operate by the SEC.
Any person engaging 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 for not more than six months or both.