SEC sanctions 3 more erring lending firms
The Securities and Exchange Commission (SEC) has imposed sanctions on three more erring companies for violating several rules on online lending platforms, including unfair debt collection practices and disclosure discrepancies, as it intensifies efforts to protect borrowers.
The corporate watchdog fined Link Credit Lending Investors Inc. P1 million for supposedly sending insulting messages and threats “that tend to abuse” borrowers and force them to pay their loans.
In an order dated July 18, the SEC financing and lending companies department found Link Credit liable for four counts of violation of SEC Memorandum Circular No. 18, Series of 2019. This prohibits unfair debt collection practices to protect investors.
The commission warned Link Credit that more violations “will be dealt with more severely,” on top of the monetary penalty.
Meanwhile, LHL Online Lending Inc., which is behind Pautang Online and Pautang Peso, was ordered to pay P129,000 for violating Republic Act No. 3765, or the Truth in Lending Act. The law mandates creditors to provide borrowers “a clear statement” detailing the terms of the loan before the transaction is consummated.
Hidden surcharges
The SEC noted that LHL’s loan payment terms indicated a repayment period of 150, 180 or 210 days for borrowers.
It found, however, that the company required borrowers to pay within a shorter period, and were therefore “subjected to hidden surcharges and interest.”
“The intent of the law, which is to ensure that borrowers are well-informed about the agreements they enter into, has been undermined by [LHL’s] deceptive practices,” the SEC said in a separate order.
“Worse still, borrowers were misled into agreements through misleading information that made them appear to be wise choices, when in fact, they were not,” it added.
Unregistered
The SEC also issued a cease and desist order against Hinance Lending Investors Corp., which operates HotCash, VI Peso and KindCash, for running an unregistered online lending platform (OLP).
It found that Hinance owned and operated Magic Peso, which was previously found to have been operating despite the SEC’s moratorium on new OLPs imposed in 2021.
The July 15 order directed the company and its owners, operators, promoters, representatives and agents to immediately stop operations to “prevent fraud, injury or harm to the public and financial consumers who are at [Hinance’s] mercy.”
Under SEC Memorandum Circular No. 10, Series of 2021, only OLPs registered as of Nov. 2, 2021 were allowed to continue operating after the SEC received “numerous complaints” about the supposed violations of companies in this industry. Magic Peso was not listed among the OLPs allowed to operate.
