The Securities and Exchange Commission (SEC) released a fresh batch of closure orders to stop a seemingly endless wave of unlicensed online lenders, whose rise was fueled by unwitting victims and social media influencers.
The SEC said in a statement that the Commission En Banc, on March 22, issued immediate cease and desist orders against six firms —raising the total number of closure orders against online lending apps to 72.
The six firms found in violation of the law were PesoKwento, Pondo Cash, TBAG, Cash Sky, Loan Cash and East Cash.
The SEC said the firms were unregistered and thus operating illegally without the necessary certificates of authority to operate as lending companies.
The corporate regulator further warned their representatives and promoters from offering or advertising their activities “through the internet or any other media, and to remove all materials involving such.”
Online lending apps allow borrowers to make loans of a few thousand pesos with minimal requirements. Some lenders also require access to the borrowers’ locations, contact lists and access to their devices, based on reviews made by online personalities.
Access to sensitive personal details also led to unfair collection practices and harassment—including threats to “ruin their reputation and to cause physical harm to their persons and their families.”
The SEC said it had received complaints from some borrowers of such practices.
“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,” the Commission En Banc said.
Acknowledging the scale of the problem, the SEC said it would establish a Financing and Lending Division “that aims to focus exclusively on the regulation and monitoring of such companies.” In the same statement, SEC chair Emilio Aquino pledged to intensify the fight against abusive lending companies.
It also has an online team that regularly monitors complaints and “goes through different social media platforms to check on possible abusive or illegal lending practices.”
Aquino, in a report to the Department of Finance, said the SEC has revoked over 2,000 certificates of registration of lending companies that failed to secure their requisite certificates of authority.
The SEC had also canceled the licenses of 37 financing or lending companies due to various violations of applicable rules and regulations.