In an order dated July 21, the regulator’s Financing and Lending Companies Department ordered the lender to pay P1.03 million in administrative fines for violating rules on interest rate limits and debt collection.
The case stemmed from a complaint alleging the company deducted 38 percent of the principal amount upfront for every loan while also subjecting the borrower to threats, harassment and public shaming.
Interest far above cap
The SEC found the 38 percent upfront charge translated to a seven-day effective interest rate of 61.29 percent, equivalent to 262.67 percent a month or 8.67 percent a day.
That exceeded the regulatory ceiling of 15 percent a month, or about 0.5 percent a day, under SEC Memorandum Circular No. 3. The regulator also found the borrower had been threatened and publicly identified on social media for failing to repay the loan, violating rules against unfair debt collection practices.
‘Not a license to humiliate’
“The Department does not hold that a demand for payment, even one expressed firmly, is by itself unlawful. A creditor has the right to collect a valid obligation. But the right to collect is not a license to humiliate,” the SEC said in its order.
The latest enforcement action underscores the regulator’s continuing crackdown on online lenders that charge excessive interest or use abusive collection tactics against borrowers.
—Edited by Miguel R. Camus
