The Securities and Exchange Commission (SEC) has declared final and executory the revocation of the Certificate of Authority (CA) of KingABC Lending Corporation to operate a lending company, after it engaged in unfair debt collection practices.
In a resolution dated August 2, the SEC Corporate Governance and Finance Department (CGFD) denied the Motion for Reconsideration filed by KingABC – operator of online lending platforms Pondo Loan, Start Loan, Green Loan, and Loan Club – for lack of merit.
“The Department reiterates that the business of lending is imbued with public interest. As such, the Commission is mandated to see to it that only lending companies that are serious in their compliance with the laws, rules, and regulations are allowed to operate,” read the resolution, which became final and executory after KingABC failed to file an appeal within the allowed period.
The CGFD issued the revocation order on June 7 after finding that KingABC has committed 15 violations of SEC Memorandum Circular No. 18, Series of 2019 (SEC MC 18), which provides for the Prohibition on Unfair Debt Collection Practices of Financing Companies and Lending Companies.
The CGFD found KingABC to have threatened borrowers with shaming on social media by publishing their names as scammers and contacting people in the borrowers’ contact list despite not being named as co-makers or guarantors.
KingABC also used obscenities, insults, or profane language in its debt collection, and threatened to sue borrowers based on made-up legal bases, according to the CGFD.
The CGFD has previously penalized KingABC for its first and second violations of SEC MC 18. A third violation merits the imposition of either a monetary fine, suspension, or revocation of the company’s CA, depending on the facts, circumstances, and gravity of the case.
Aside from KingABC’s 15 violations, the CGFD noted that 53 more complaints have been filed against the company for its debt collection practices.
SEC MC 18 took effect on September 8, 2019, as part of the Commission’s response to several complaints for unreasonable, abusive, and unfair practices that lending and financing companies employed to collect debt from borrowers.
In its Motion for Reconsideration, KingABC argued that the 15 complaints merely contained allegations without proof, and that the volume of complaints by itself was not sufficient to justify the revocation of its CA, given that SEC MC 18 requires proof of those allegations.
The CGFD however maintained that the evidence on record more than adequately supported the revocation of KingABC’s CA. The department further emphasized that during its investigation, KingABC itself admitted that its agents committed “unlawful and unauthorized” and “unrighteous misconduct” towards its borrowers.
“A review of all the screenshots of messages submitted by the 15 complainants, including the 53 others who also filed complaints against the Respondents reveal commonalities and recurring patterns, including the substance of the threats and sentence construction of the said messages,” the August 2 resolution read.
“To a reasonable mind, all these pieces of evidence prove Respondent committed 15 violations of SEC MC 18. Thus, it was only apt for the CGFD to find Respondent guilty of violating SEC MC 18 and impose the penalty of revocation of its license.”