CAGAYAN DE ORO CITY (PIA)-- The Securities and Exchange Commission (SEC) has issued a warning to the public on the potential risks associated with online lending platforms.

Jesher M. Radaza, supervising administrative officer of SEC -Cagayan de Oro Extension Office (CDOEO), explained in Talakayan sa PIA, that even if a company is organized as a stock corporation, it is no guarantee that the corporation can immediately start their lending business.

Lending is limited to stock corporations, so it is only in the form of stock corporations that are allowed to do or operate a lending company, which means that individuals or partnerships other than stock corporations are not allowed to engage in lending business.

“They must secure the authority or license from the SEC before they can start to operate a lending business,” he said.

Further, Republic Act (RA) 9474 requires these companies to present their certificate of authority from the SEC when applying for business permits at the local government units. In turn, the LGUs should not have to issue any license or permit to these lending businesses if they cannot present an authority from the SEC.

There are so many victims of scams these days.

As observed, Radaza said, and after conducting an investigation of people who reportedly got scammed. Victims are usually required to deposit or pay in advance before an online lending company releases their loan proceeds.

The lending company claims that this will demonstrate your ability to repay the loan in full or test your competency as a borrower.

“For us, that is inappropriate, and based on our investigation, this is considered a scam because, more often than not, those who gave money, after payment, later the lending companies disappeared,” Radaza shared.

“We advise the public not to immediately transact business with these online lenders; maybe we have to inquire with the SEC if this lending company is really registered,” he added.

Some falsify documents from the SEC.

“They have just copied those documents from our website and those documents available on the internet, issued to these online lenders, and then they falsified and changed something in the document just to show that they are the ones authorized by SEC,” Radaza explained.

The SEC does not advise the public to transact business with these persons because they have different intentions and purposes that are not really intended for lending, but they are there maybe to get something out of one's pocket.

Among the warning signs are receiving unsolicited text messages, being informed of qualification without application, and receiving a message about an approved loan ready for release.

Additionally, individuals should exercise caution when feeling pressured into a transaction where the loan release is contingent upon depositing 10 percent, purportedly to demonstrate their capability to fulfill the financial obligation upon disbursement.

Finally, they could release the loan even without collateral, with no additional due diligence investigation of the borrower’s background.

“We have to weigh and analyze everything, not based on our own emotions, so we have to analyze that even if this is an emergency, kaya ba nako siya bayaran [can I pay it]?” Radaza said.

The SEC says it is critical for consumers to remain knowledgeable, watchful, and proactive in response to these new concerns in the online lending space. People are urged to report any suspicious or fraudulent activity to the relevant authorities in order to promote a cooperative endeavor to guarantee the safety and security of the financial environment. (JMOR/PIA-10)