The recent decision by the Securities and Exchange Commission (SEC) to cancel the lending license of Copperstone Lending, Inc. has sent shockwaves through the financial industry. This action comes in response to the company's deceptive practices and failure to disclose crucial terms of loan contracts with borrowers.
Understanding the Violations
Violation of Republic Act No. 3765 (Truth in Lending Act)
Copperstone Lending was found in violation of the Truth in Lending Act (TILA), which mandates transparent disclosure of loan terms. SEC's FinLend Division discovered discrepancies between the terms advertised and the actual terms offered to borrowers.
Breach of SEC Memorandum Circular No. 18, Series of 2019
Copperstone Lending failed to comply with SEC Memorandum Circular No. 18, Series of 2019 (MC 18), which prohibits unfair debt collection practices. This includes threats, use of profanity, and disclosure of borrower information in any platform or medium.
In a statement dated April 11, 2024, the SEC said Copperstone Lending operates online lending platforms (OLPs) Quickla, Pococash, Blue Peso, Peso Forrest, Moca Moca, Pesobuffet, and Load Cash.
Citing the 2005 case of Development Bank of the Philippines vs. Arcilla, Jr., FinLend noted that the TILA was enacted primarily “to protect [citizens] from a lack of awareness of the true cost of credit to the user by using a full disclosure of such cost with a view of preventing the uninformed use of credit to the detriment of the national economy.”
The Fallout
As a consequence of these violations, Copperstone Lending's Certificate of Authority to operate as a lending company was revoked, along with its primary registration. Additionally, the company was fined P20,000 for violating the TILA.
Exposing Deceptive Practices
Moca Moca's Deceptive Tactics
Findings revealed that Moca Moca, one of Copperstone Lending's online lending platforms (OLPs), disbursed loans without informing borrowers of the exact amounts and interest rates. The company was also found guilty of false advertising regarding loan terms.
Threats and Harassment by Pesobuffet
Complaints against Pesobuffet highlighted their use of intimidation tactics, including threats of legal action and harassment of borrowers' contacts. Such practices blatantly violate MC 18.
The Legal Standpoint
The SEC cited the case of Development Bank of the Philippines vs. Arcilla, Jr. to emphasize the TILA's purpose: protecting consumers by ensuring full disclosure of credit terms. Copperstone Lending's actions directly contradict this principle.
The SEC's decision to cancel Copperstone Lending's lending license underscores the importance of transparency and fair practices in the lending industry. This serves as a warning to all financial institutions that deceptive practices will not be tolerated.
FAQs:
- What led to the SEC's decision to cancel Copperstone Lending's license? The SEC found Copperstone Lending guilty of unfair debt collection practices and failure to disclose accurate loan terms, violating both the Truth in Lending Act and SEC Memorandum Circular No. 18.
- What consequences did Copperstone Lending face as a result of the SEC's decision? Copperstone Lending had its lending license revoked, along with its primary registration, and was fined P20,000 for violating the Truth in Lending Act.
- What deceptive practices were exposed within Copperstone Lending's online lending platforms? Moca Moca and Pesobuffet were found guilty of disbursing loans without disclosing accurate terms to borrowers and engaging in threatening and harassing behavior towards borrowers.
- How does the SEC aim to protect consumers through its actions against Copperstone Lending? The SEC aims to promote transparency and fair practices in the lending industry, ensuring that borrowers are fully informed and protected from deceptive practices.
- What message does the SEC's decision send to the financial industry? The SEC's decision sends a clear message that deceptive practices will not be tolerated and highlights the importance of compliance with regulations to protect consumers.
