The Securities and Exchange Commission (SEC) has ordered three online firms to stop their unauthorized lending activities and their use of abusive collection practices.
In an order issued April 26, the Commission En Banc directed Golden Cash, Help Cash, and Grace Cash to immediately cease and desist from engaging in, carrying out, promoting and facilitating any lending activity or transaction until they have secured the necessary registration and license from the SEC.
The owners, operators, promoters, representatives, and agents of the online lending operators were likewise directed to stop from engaging in unfair debt collection practices, as defined under SEC Memorandum Circular No. 18, Series of 2019 (MC 18).
The Commission also ordered the online lending operators to stop offering and advertising their lending business through the internet or any other media, and to delete materials involving such.
The SEC issued the order after finding that Golden Cash, Help Cash, and Grace Cash are not registered as a corporation with the Commission. As such, they cannot secure a Certificate of Authority to Operate as a Lending/Financing Company.
The Lending Company Regulation Act of 2007 (LCRA), requires persons or entities operating as lending companies to register as corporations and to secure from the SEC the necessary authority to operate.
“The Commission finds that the continued operations of Golden Cash, Help Cash, and Grace Cash constitute 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 Commission En Banc held.
Findings by the SEC Enforcement and Investor Protection Department (EIPD) also revealed that the online lending operators have been employing unfair collection practices, prohibited under MC 18.
The EIPD noted that the online lending operators have been harassing, threatening, publicly humiliating their respective borrowers, and imposing hidden charges and excessive processing fees.
“The acts of these 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...have no place in a society that is governed by and faithfully adheres to positive laws,” the Commission En Banc noted.