The Securities and Exchange Commission recently issued a warning to financing and lending companies that resort to violence and other unfair practices in their credit collection efforts.
The SEC issued Memorandum circular No. 18, series of 2019, imposing hefty penalties, including revocation of permit to operate, on financing and lending companies harassing borrowers and using other abusive and unethical means to collect debts.
Some of these credit institutions have been found to engage the services of third-party service providers to circumvent liability for client harassment.
Unethical collection practices include: 1) use violence or or threats of violence to physically harm people, their reputation or property, 2) use of obscenities, insults and profane language, 3) the publication of the names and other personal information of borrowers allegedly refusing to pay debts, 4) communicating or threatening to communicate to any person false loan information, including the failure to communicate that the debt is being disputed, 4) use of false representation or deceptive means to collect debt, and 5) making contact with borrowers at unreasonable or inconvenient hours.
The circular was signed by SEC Chairman Emilio Aquino on August 20, 2019 and will take effect after 15 days.