SEC shuts down 11 more online lenders

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The Securities and Exchange Commission

Metro Manila (CNN Philippines, September 23) — The Securities and Exchange Commission (SEC) has shut down 11 more online lending companies as it intensifies its crackdown on “unreasonable” collection practices.

The SEC said it issued cease and desist orders against the following lending firms: Cash Whale, Cash 100, Cashafin, CashFlyer, CashMaya, Cashope, Cashwarm, Cashwow, Creditpeso, ET Easy Loan, and Peso2Go.

The closure orders were issued on September 20, and came days after the regulator also padlocked 19 other online lenders.

“Based on the findings of the SEC Corporate Governance and Finance Department, the online lending applications and entities operating them have not secured the required certificates of authority to operate as lending or financing companies,” the SEC said in a statement on Monday.

These companies were discovered to have been operating without permits from the SEC, which is a direct violation of Republic Act No. 9474 or the Lending Company Regulation Act of 2007.

Complaints about the abusive collection methods prompted the SEC to crack down on online lending apps. While they promise fast loans without much requirements compared to banks, these lenders apparently resort to public ridicule and high interest rates to make profits.

These lenders were also said to set unfair loan terms, make misrepresentations for fees and charges, and violate borrowers’ right to privacy.

According to the SEC unit, these online-based lenders gained access to people’s personal data stored in their borrowers’ mobile phones, such as contact numbers, Facebook accounts, and email addresses through the installed mobile application.

“The unauthorized lenders then used such information to exact prompt payment. In many cases, the unauthorized lenders would send a text message to the borrower’s contacts to inform them about the indebtedness and the borrower’s supposed refusal to pay the amount due,” the regulator said, while others are threatened of legal action or even “public shaming” on social media if they do not settle their dues.

The SEC previously said that the online shaming of delinquent borrowers has caused depression, sleepless nights, and other health issues.

Apart from the 30 shuttered online lending firms, the SEC also revoked the registration of 2,081 other financing companies for operating without the needed licenses.