SEC sanctions more erring lending firms
The Securities and Exchange Commission (SEC) continues to come down hard on online lending companies that mislead their clients and perpetuate “unfair” collection practices, such as threatening and shaming debtors who can’t pay.
In an issuance dated June 18 and posted on its website on July 18, the SEC imposed a P1-million administrative penalty against Link Credit Lending Investors, operator of iPeso and PesoIn lending platforms.
In a separate issuance on July 17, the SEC also slapped a P129,000 penalty against LHL Online Lending Inc., doing business as Pautang Online and Pautang Peso, citing violations of the Truth in Lending Act.
In the case of Link Credit, the SEC Financing and Lending Companies Department noted that from September 2022 to March 2023, it received a total of 251 complaints, mostly for “unfair debt collection practices.”
Some of these complaints were cited in the order to impose the P1-million fine. For instance, one complainant said the lender kept on sending “threatening” messages. Collection agents also allegedly threatened to shame the borrower by calling this person’s emergency contacts.
Others filed similar complaints and reported screenshots of the messages that contained foul language.
“Considering the content of these submissions, there is an overwhelming basis to engender a reasonable benefit that these violations have been committed,” the SEC said.
For its part, Link Credit questioned the “originality” of the pieces of evidence and invoked its “valid exercise of right to collect outstanding debt.”
The rules against “unfair” debt practices count the following as forms of violations: use of obscenities, insults or profane language; publication of the names and other personal information of the borrowers; and the use of any false representation or deceptive means to collect or attempt to collect any debt or to obtain information concerning a borrower.
The SEC also issued “stern warning” to Link Credit, noting this was already the fourth violation of the company.
In a separate issuance posted on July 17, the SEC held the operator of Pautang Online and Pautang Peso liable for three counts of violation of the Truth in Lending Act. The P129,000 penalty was computed by summing up the penalties for the first, second and third offenses.
One complainant said his loan term had appeared to be 210 days with a loan amount of P6,000 taken out on April 30, 2022. But by the end of May 2022, he was expected to repay nearly the entire loan amount.
The SEC noted that the LHL platforms had stated in its disclosure that the loan term was for 150, 180m to 210 days.
“However, in reality the consumer or borrower is given a shorter period to repay, and hidden surcharges and interest for failing to settle the loan within this shorter timeframe undermine the noble intent of the law, which aims to make borrowers ware of the true cost of credit,” it said.
