SEC Orders 6 Online Lending Companies to Stop Operations

Several unlicensed lenders, which rose due to social media influencers and unknowing victims, have recently been ordered to close by the Securities and Exchange Commission (SEC). On March 22, cease and desist orders were issued to six firms — namely PesoKwento, Pondo Cash, TBAG, Cash Sky, Loan Cash, and East Cash — subsequently increasing the number of closure orders against online lenders to 72 in total, according to the SEC.

The aforementioned firms were unregistered and, hence, operating illegally without the certificates of authority necessary for online lending companies. A warning has likewise been issued by the regulator to representatives and influencers advertising these firms and their activities “through the internet or any other media, and to remove all materials involving such.”

Through online lending apps, borrowers are enabled to make loans with minimal requirements but lenders will often require access to their locations, contact lists, and devices. This, in turn, introduced unfair collections practices as well as harassment which threatened to “ruin their [borrowers’] reputation and to cause physical harm to their persons and their families.” The SEC has affirmed that it received complaints of such incidents.

“The abusive collection practices, misrepresentations, and unreasonable terms and conditions perpetrated and imposed by the online lending operators, their agents, and representatives are the very acts and practices that, as a matter of policy, the state seeks to prevent and penalize,” explained the Commission En Banc.

The regulator is now planning to establish its own Financing and Lending Division “that aims to focus exclusively on the regulation and monitoring of such companies.” SEC Chair Emilio Aquino has also committed to reinforcing efforts to combat abusive lending companies. Currently, the SEC already has an online team that regularly monitors complaints and “goes through different social media platforms to check on possible abusive or illegal lending practices.”

An earlier report filed by the SEC to the Department of Finance noted that more than 2,000 certificates of registration of lending companies have been revoked due to their failure to secure certificates of authority. Moreover, the licenses of 37 lending companies have also been canceled due to various violations.

Source: Inquirer