April 24, 2020 – The Securities and Exchange Commission (SEC) has flagged 4 online lending applications and has ordered them to shut down for running a lending business without a license.
These are the lending companies flagged by the SEC:
- Little Cash
As well as their owners:
- CashAB Lending Co
- Mimosa Credit Ltd.
- Zamoya Credit Ltd.
The SEC ordered these operators, including their agents and promoters and anyone acting on their behalf to immediately cease and desist (including deleting of their apps) for lacking the necessary requirements to operate a lending business. The 4 lending apps are not established as corporations, which a violation of the Lending Regulation Act of 2007 that requires lending companies to register as a corporation. The law also requires an approval from the SEC before any lending company can operate a lending business.
The lending companies also gained access to personal information on the borrowers’ mobile phones, including their social media accounts, contact numbers, etc, and then they used this information to coerce the borrower to pay. For example, they would text blast the borrower’s contacts, informing everyone of the loan, thereby shaming the borrower. There are also cases where the borrowers are threatened with legal action or public shaming. The Lending Company Regulation Act of 2007 forbids such practices.
The Financing Act of 1998 punishes those without a license to engage in a financing business a fine of Php 10,000 – Php 100,000 or imprisonment of not more than 6 months or both.
This article is published on BitPinas: PH SEC Orders Lending Apps CashAB, CashOcean, KwikPeso, and Little Cash to Stop Operating