Sunday, May 26, 2024

License of online lender revoked for unlawful debt collection practices

The Securities and Exchange Commission (SEC) has revoked with finality the license of Populus Lending Corporation to operate as a lending corporation for unlawful debt collection practices and failure to disclose its online lending platforms (OLPs) to the agency.

In an order dated July 14, the SEC found that Populus Lending has committed several violations of SEC Memorandum Circular No. 18, Series of 2019(MC 18) on the Prohibition on Unfair Debt Collection Practices.

The company was also found to have violated SEC Memorandum Circular No. 19, Series of 2019 (MC 19) requiring financing and lending companies to disclose all of the OLPs they operate to the commission.

The case stemmed from nine formal complaints and 355 informal complaints filed by former Populus Lending clients from September 2022 to March 2023, alleging that the company resorted to using threats, obscene language, false representations, and doxing tactics, or using information about an individual with malicious intent, in their debt collection practices.

The complainants cited receiving threatening messages, aggressive comments on their Facebook posts, sending demand messages to people not involved in the loan but are acquainted with the complainants, and threatening to blacklist them in all financial institutions, among others.

MC 18 expressly prohibits the use of threats, insults, obscenities, profane language, and any false representations or deceptive means to force any individual to pay their debts.

The guidelines also preclude lending and financing companies from contacting people in the borrower’s contact list without their consent, among other conditions.

Meanwhile, the implementation of a search warrant by the Philippine National Police Anti-Cybercrime Group (PNP-ACG), together with the SEC Enforcement and Investor Protection Department, in July 2022 revealed that Populus Lending had been operating Pesopop, Antwallet, Dragonloan, Catcash, Topeso, Takecash, Pesohere, Weagle, Cocopeso, Cashin, Candycash, and Cashcow in its Pasig City office.

Data from the SEC showed that Populus Lending only has four registered OLPs with the agency, namely Pesopop, PesoCow, NewCash, and LuckyLoan.

MC 19 requires lending and financing companies to regularly submit an affidavit of compliance to ensure that their OLPs are duly registered with the SEC.

“Based on the digital forensic examination conducted onsite on 22 July 2022, particularly the seized devices, and the voluntary statements of the collection agents, [PopulusLending] and its collecting agents were operating and using thirteen (13) online lending applications (OLPs), not four (4) OLPs,” the revocation order read.

“Simply put, we find that [Populus Lending] violated the above-cited SEC Circulars and exercised misrepresentation and deceit.”

The SEC previously issued a cease-and-desist order against Populus Lending on June 26, 2023 for its unfair debt collection practices.

Given the company’s failure to appeal the revocation order, the SEC through an order dated August 1 resolved to make the decision final and executory.

To date, the SEC has cancelled the licenses of 41financing/lending companies due to various violations of applicable rules and regulations.

A total of 81 OLPs operated by unregistered financing and lending companies have also been ordered to cease and desist their operations for lack of authority to operate as a lending or financing company.

Further, six financing and lending companies, with their 26 OLPs, including four owned by Populus Lending, were also ordered to stop their operations.

The SEC has likewise revoked the primary registration of a total of 2,084 lending companies to date for non-compliance with Republic Act No. 9474, or the Lending Company Regulation Act.

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