REGULATORS are warning the public against online lending and entities operating through social-media sites, such as Facebook, Twitter and LinkedIn, promising to lend money to individuals.
The Securities and Exchange Commission (SEC) said these firms are not registered with the securities regulator.
These entities operate like normal lenders wherein borrowers are asked to provide their general and personal information. The borrowers are then asked to deposit certain amount of money as “processing fee”.
After the entity acquires access to the deposited cash, the lenders close all communication threads with the would-be borrowers and delete all negative comments against them. Some lending companies are even using fake or nonexistent web addresses in their profile to make the web sites appear legitimate and valid, the SEC said.
“The SEC is the lead government agency that supervises and regulates lending companies,” the agency said in a notice. “As such, all companies engaged in the granting of loans must be registered with the Commission and issued a Certificate of Authority to operate as a lending company.”
The Lending Company Regulation Act of 2007 (Republic Act 9474) imposes a fine against offenders of not less than P10,000 and not more than P50,000, or an imprisonment of not less than six months but not more than 10 years, at the discretion of the court.
“As a precautionary measure, the public is hereby advised to exercise prudence in dealing with online lenders by checking with the Commission if they are registered and have a Certificate of Authority to operate as a lending company,” the agency said.
“Anyone who is desperately looking for money could be easily maneuvered by these bogus or pseudo lending companies,” it added.
The SEC is tightening its grip even on those lending firms that are working “offline”.
It recently suspended the primary license of 84 lending companies that failed to obtain a secondary license or a Certificate of Authority to operate as a lending company.
Earlier, the SEC twice sent out more than 300 “Show Cause” letters to registered companies engaged in lending but have not secured a license to operate as such.
The letters required the companies to explain why their certificates of registration as a corporation should not be suspended in view of the failure to secure the said license.
Out of the 300 or so second Show Cause Letters, 84 were returned to the sender.