SEC orders online lending firms to stop operations

Published January 22, 2020, 12:00 AM

by manilabulletin_admin

By James A. Loyola

The Securities and Exchange Commission (SEC) has ordered Peso Tree, Pesoalo and Pinoy Cash Loan to stop offering loans to the public through online platforms because it does not have the necessary licenses.

The Commission En Banc issued an order enjoining the owners, operators, promoters, representatives, agents and any and all persons claiming and acting for and in their behalf to immediately cease and desist, under pain of contempt, from engaging in, promoting and facilitating unauthorized lending activities.

The SEC likewise ordered Peso Tree, Pesoalo and Pinoy Cash Loan to cease from offering and advertising their lending business through the internet and to delete or remove promotional presentations and offerings from the internet, including the lending applications they operate.

Section 4 of Republic Act No. 9474, or the Lending Company Regulation Act of 2007, requires that a lending company be established only as a corporation.
It further provides that “no lending company shall conduct business unless granted an authority to operate by the SEC.”

Peso Tree, Pesoalo and Pinoy Cash Loan offered loans to the public through their respective websites, mobile applications, Facebook pages and other similar online platforms, based on the findings of the Commission’s Corporate Governance and Finance Department and Enforcement and Investor Protection Department (EIPD).

Certifications by the SEC Company Registration and Monitoring Department (CRMD), however, showed that Peso Tree, Pesoalo and Pinoy Cash Loan were not registered as corporations and that they were not issued the necessary certificate of authority to operate as lending companies.

The EIPD further found the online lending operators to have employed abusive collection practices by imposing high interest rates, onerous and misleading terms and conditions.

They also make 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 order read.

“Finally, the Commission cannot turn a blind eye on the fact that the Online Lending Operator’s violation in the instant case was aggravated by the fact that they conducted their business in an unscrupulous manner with evident bad faith, by charging their borrowers unconscionable interest rates, subjecting them to inhumane treatment using abusive and degrading language, and similar other harassment strategies in order to collect debts. This has to stop immediately,” said the SEC.