Illegal lending Apps

EDITORIAL

The Securities and Exchange Commission issued a warning addressed to the public regarding several unregistered online lending applications that advertise and operate through popular social media platforms like Facebook and Twitter.

A report by Helen Veryan C. Valdez of SEC-Baguio warned the public to exercise prudence in dealing with online lenders by checking firsthand with the Commission if the online lending applications are registered and have a Certificate of Authority to operate as a lending company.

Anyone who is desperately looking for money could easily fall prey to the advertisements offering low interest rates and easy loan processing. These illegal applications ask the borrowers to provide their general and personal information and deposit a certain amount as “processing fee.” However, after the payment is made, the lending operators halt all communication and block their borrowers on social media. 

The Commission has also been bombarded with complaints about unreasonable and invasive collection practices done by these unlicensed lending operators. The SEC Enforcement and Investor Protection Department (EIPD) found out that they use the personal information they have gathered to publicly humiliate and ridicule the borrowers who could not pay their loans. In other cases, the borrower would be threatened of legal action or public shaming on social media.

A number of complainants said the abusive collection practices of the unauthorized lenders have caused them depression, sleepless nights, and health issues.

Republic Act No. 9474, or the Lending Company Regulation Act of 2007, provides that “no lending company shall conduct business unless granted an authority to operate by the SEC.” Any person who shall engage in the business of lending without a valid authority to operate may face a fine ranging from P10,000 to P50, 000 or imprisonment of six months to 10 years or both.

As part of its campaign to halt all illegal lending operations, the SEC has revoked the Certificates of Registration of 2,081 lending companies for their failure to obtain the required authority to operate as a lending or financing company. The Commission has also issued Cease and Desist Orders against lending applications such as Cash Whale, Cash 100, Cashafin, CashMaya, ET Easy Loan, among others.

The SEC enjoined the owners of the online lending applications to immediately cease their lending operations and delete all promotions posted in the internet.

Be forewarned.