Online Lenders Lacking Licenses Ordered to Cease Operations

On Tuesday, seven online lenders were ordered by the Securities and Exchange Commission (SEC) to freeze their operations after it was found that they lacked the necessary licenses. The online lending companies consist of PesoBee, Peso T-Safe Online Cash, RushLoan, SkyMart, SpendCash, Tapa, and WithU.

All of the aforementioned lenders were notified “to immediately cease and desist from operating, engaging in, carrying out, abetting, and/or promoting lending/financing businesses and related activities until they have incorporated and secured from the SEC authorization to pursue such activities,” following a Commission En Banc order.

“The companies, their agents, representatives, and promoters, as well as the owners and operators of their hosting sites, were further enjoined to cease from offering and/or advertising their lending business and related business through the internet or any other media, and to remove all materials involving such,” explained the SEC.

The Commission En Banc order, which was issued on February 8, was announced following the SEC’s discovery that none of these companies were registered as a corporation with the regulator. According to the SEC, these eight online lenders also did not have Certificates of Authority to Operate as a Lending/Financing Company (CA).

Persons or entities that look to operate as lenders are required to register as corporations as well as secure authority from the SEC to operate as such, under Republic Act No. 9474 or the Lending Company Regulation Act of 2007 (LCRA). “[T]he Commission finds that the continued operation of the Online Lending Operators constitutes a clear violation of, and should be penalized pursuant to the [LCRA] because it engages in or carries out a lending business without the required license from the Commission.”

The SEC maintained that these operators were also found to have been committing unacceptable methods. “The acts of the unregistered online lending operators in illegally offering and providing loans to the public, charging high interest rates, and subjecting its debtors to unfair treatment through abusive and even libelous language in collecting the loaned amount.”

Protecting borrowers from abusive, unethical, and illegal lenders remains a top priority for the SEC as it continues to monitor lending and financing companies, checking whether they comply with applicable laws, rules, and regulations. Around 36 licenses of lending companies have since been canceled, 2,081 certificates of registration have been revoked, and 73 online lending applications have been ordered to cease operations as the SEC upholds its promise.

Source: GMA News