SEC cracks down on illegal online lenders

MANILA, Philippines — The Securities and Exchange Commission (SEC) has stepped up its crackdown on illegal online lenders.

In an order dated Jan.21, the Commission en banc directed Peso Tree, Pesoalo and Pinoy Cash Loan to stop offering loans to the public through their online platforms.

The three companies were found to be soliciting investments without the necessary license. 

They were also ordered to delete or remove promotional presentations and offerings from the internet, including the lending applications they operate.

The SEC also enjoined the owners, operators, promoters, representatives, agents and all persons claiming and acting for and on their behalf to immediately cease and desist from engaging in, promoting and facilitating unauthorized lending activities.

Under Section 4 of Republic Act 9474 or the Lending Company Regulation Act of 2007, a lending firm  must be established only as a corporation.

The SEC warned that 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.

The three companies  were also found to engage in “abusive collection practices by imposing high interest rates, onerous and misleading terms and conditions, making misrepresentations as to non-collection of charges and fees and subjecting their debtors to public humiliation and ridicule to the extent of violating their right to privacy to ensure prompt and full collection of indebtedness.”

“Considering that the online lending operators are not incorporated entities and 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 said.

So far, the SEC has issued cease and desist orders against 48 online lending firms.