The Securities and Exchange Commission (SEC) has revoked the Certificate of Authority (CA) of KingABC Lending Corporation, which runs online lending platforms, to operate as a lending company because of its unfair debt collection practices.
In an order, the SEC Corporate Governance and Finance Department (CGFD) found KingABC to have committed 15 violations of SEC Memorandum Circular No. 18, Series of 2019 (SEC MC 18), which provides for the Prohibition on Unfair Debt Collection Practices of Financing Companies and Lending Companies.
The CGFD found KingABC to have threatened borrowers with shaming on social media by publishing their names as scammers and contacting people in the borrowers’ contact list despite not being named as co-makers or guarantors.
KingABC also used obscenities, insults, or profane language in its debt collection, and threatened to sue borrowers based on made-up legal bases, according to the CGFD.
The CGFD has previously penalized KingABC for its first and second violations of SEC MC 18. A third violation merits the imposition of either a monetary fine, suspension, or revocation of the company’s CA, depending on the facts, circumstances, and gravity of the case.
“It is likewise clear that at this point, the revocation of Respondent’s CA is not merely appropriate, but rather necessitated by the gravity and number of its offenses,” the CGFD said.
It noted that, aside from KingABC’s 15 violations, 53 more complaints have been filed against the company for its debt collection practices, as of date of the order.
“Even more telling is the fact that subsequent to the issuance of the Formal Charge, the abusive collection practices of the Respondent only became worse and more hostile based on the evidence submitted by the complainants,” said the CGFD.
It added that, “The Department noted messages filled with death threats, profanities, and other obnoxious and reprehensible language.”
SEC MC 18 took effect on September 8, 2019, as part of the Commission’s response to several complaints for unreasonable, abusive, and unfair practices that lending and financing companies employed to collect debt from borrowers.
The SEC continues to monitor lending and financing companies for their compliance with applicable laws, rules and regulations.
The revocation of KingABC’s CA brings the total number of financing/lending companies with cancelled licenses due to various violations of SEC rules and regulations to 35.
To date, the SEC has also revoked the primary registration of a total of 2,081 lending companies for their failure to secure the requisite certificate of authority, pursuant to Republic Act No. 9474, or the Lending Company Regulation Act of 2007.
The Commission likewise ordered 58 online lending applications to cease operations for lack of authority to operate as a lending or financing company last year.