The Securities and Exchange Commission (SEC) has slapped a ₱1.03 million fine on Inclusive Credit Lending, Inc. for imposing excessive interest rates of up to 262.67 percent and engaging in unfair debt collection practices, including threats and public shaming.

In an order dated July 21, the SEC Financing and Lending Companies Department (FLCD) found Inclusive Credit administratively liable for violating SEC Memorandum Circular (MC) No. 3, which prescribes interest rate and fee ceilings on online lending platforms, and MC No. 18, Series of 2019, which prohibits unfair debt collection practices.

The order stemmed from a complaint filed by a borrower who alleged that Inclusive Credit, through its online lending platform Pinoy Peso, imposed upfront deductions amounting to 38 percent of the principal on every transaction.

The complainant further reported being subjected to threats, harassment, and public shaming during the collection process.

An investigation by the FLCD showed that the 38 percent upfront charge structure in the Pinoy Peso interface translates to a seven-day effective interest rate (EIR) of 61.29 percent, equivalent to 262.67 percent per month or 8.67 percent daily. This far exceeds the prescribed monthly EIR ceiling of 15 percent, or around 0.5 percent per day, in violation of MC 3.

It was also found that the borrower was subjected to threats that damaged her reputation, including the posting of her photo and personal identity on social media, in violation of MC 18.

“The Department finds, by substantial evidence, that the questioned collection communications are sufficiently attributable to the collection of the Complainant's Pinoy Peso loan obligations,” the order read.

“The Department does not hold that a demand for payment, even one expressed firmly, is by itself unlawful. A creditor has the right to collect a valid obligation. But the right to collect is not a license to humiliate,” the order added. (James A. Loyola)