11 September 2019, The Securities and Exchange Commission (SEC) shut down 19 illegal online lending apps on Monday over complaints of invasion of privacy and harassment.
The SEC issued cease and desist orders against the following apps: Instant Pera, Quick Pera, LendMo Philippines, Binixo, CashBus, Cashcat, Cashuttle, Crazy Loan, Flash Cash, Happy2Peso, Hatulong, MeLoan, MoneyTree Quick Loan, Pera Express, Pera4u, Peramart, PesoLending, QuickPeso, and Umbrella.
“That’s the thing about these 19, they’re not registered with the SEC and they also have no certificate to operate,” said Commissioner Kelvin Lester Lee.
Meanwhile, officials from FinTech Alliance Philippines, Institute of Corporate Directors, Bangko Sentral ng Pilipinas, National Privacy Commission, and the Securities and Exchange Commission signed an agreement to create a code of conduct among online lending apps.
“The industry-wide code of ethics and conduct should help steer the financial technology or fintech industry towards higher standards of behavior and away from attempts to exploit it for money laundering, terrorist financing, fraud and invasion of privacy,” said Lee.
The National Privacy Commission (NPC) reports it has received nearly 1,000 complaints of harassment from online lenders.
FinTech Alliance Philippines Chairman Lito Villanueva said it has become the practice of some illegal online lending sites to pressure consumers to settle their loans by shaming them to their relatives and friends.
“Hindi nila alam na kapag nag-yes sila sa mga online lending apps na ‘yun ay pinahihintulutan nila o ina-allow nila ang mobile lenders na kuhain ang kanilang contact details. At kung sakaling hindi sila makabayad ngayon, iyon ang kanilang gagamitin para magpadala ng mga SMS na tinatawag nating public shaming,” said Villanueva.
The group has also recommended putting up a list of legitimate money-lending apps on government websites to guide online consumers.
“We are suggesting to regulators that we provide a list of legitimate players in the industry which they could actually put in their respective websites: NPC, SEC, BSP, etc.” said Villanueva.
Privacy Commissioner Raymund Liboro also reminded the public to be more mindful of the apps that they download.
“Tingnan niyo po ‘yung mga review tungkol dito. Kung nakikita niyo po na ‘yung iba ay nagsasabing hindi ito maganda ay huwag niyo na pasukin pa o patulan pa,” said Liboro.
Based on the findings of the Corporate Governance and Finance Department (CDFD), the Online Lending Operators and the persons/entities operating them have not been issued Certificates of Authority to Operate as Lending Companies or Financing Companies.
Investigations conducted by the EIPD show and confirm the existence and operation of the Online Lending Operators which do not have the requisite license from the Commission. The Online Lending Operators offer loans to the public through their respective online applications/platforms. This is shown in the screenshots of the Online Lending Operators’ websites (where the online applications can be publicly accessible] which were printed and presented by the EIPD to the Commission in support of the allegations in the Motion. The lending businesses and related activities of the Online Lending Operators are being advertised and promoted on Facebook and results in people actually availing of the loans offered by the unlicensed Online Lending Operators.
The EIPD commenced and carried out the investigation process involving the Online Lending Operators after it received numerous complaints from the public who alleged that Online Lending Operators committed unreasonable and abusive lending and collection practices which subjected debtors/complainants to public humiliation and ridicule. The complaints also allege that Online Lending Operators impose and charge high interest rates, unilaterally implement onerous and unreasonable terms and conditions, make misrepresentations as to non-collection of charges and fees, and violate the right to privacy of debtors/complainants.
The information and evidence gathered and presented by EIPD show that before a person can apply for a loan from the Online Lending Operators, he/she has to download/install their online lending applications on his/her mobile phone. By downloading/installing the online lending application, the Online Lending Operators gain access to personal information contained in the mobile phones of the debtor which includes contact numbers, Facebook accounts, e-mail addresses of all persons saved/stored therein. The Online Lending Operators uses the foregoing information to exact prompt payment by the debtors of the amount due as determined by the Online Lending Operators. The Online Lending Operators do this by sending a text blast to the persons in the contact list of the debtors’ mobile phone and informing them that the debtor obtained a loan and refuses to pay the amount due. The Online Lending Operators also threaten debtors-complainants that a case will be filed before the proper barangay and/or that the matter will be posted in social media if payment is not made.
A number of debtor-complainants declared that these abusive collection practices of the Online Lending Operators, their agents and representatives, have caused depression, sleepless nights, shame and humiliation, ruined reputation and adversely affected their health and well-being. One debtor-complainant even claimed that his father suffered a heart attack after he received the call of one agent of one of the Online Lending Operators.
It is on the basis of the foregoing factual antecedents and the evidence presented by the EIPD, in support of its Motion, that this Commission will determine if the issuance of the CDO is warranted.
Written by Mikka Montero | Modified date: January 29, 2020