I. Introduction

In the Philippines, the rapid growth of online lending, salary loans, and consumer credit has made borrowing easier—but also riskier. Loan sharks and unregistered “online lending apps” (OLAs) often charge abusive interest, harass borrowers, or disappear with personal data and payments.

Because of this, it is crucial for any borrower, employer, or business partner to know how to verify if a lending company is legitimate and properly registered with the Securities and Exchange Commission (SEC) and, where applicable, other regulators.

This article explains, in the Philippine legal context:

The legal framework governing lending companies
The difference between SEC registration and a lending license
How to verify registration and licensing status
How to screen online lending apps and platforms
Common red flags and illegal practices
Remedies and where to complain

II. Legal Framework for Lending Companies in the Philippines

Several Philippine laws and regulations interact when you deal with lending companies.

Lending Company Regulation Act of 2007 (Republic Act No. 9474)
- Governs “lending companies”—corporations engaged in granting loans from their own capital to the public.
- Requires SEC registration as a corporation and a separate Certificate of Authority (CA) from the SEC to operate as a lending company.
- Imposes rules on capitalization, corporate name, reporting, and conduct.
Financing Company Act (Republic Act No. 8556)
- Applies to financing companies, which are similar to lending companies but may obtain funds from public or institutional sources and engage in broader financing activities (e.g., leasing, factoring).
- Also requires SEC registration and a separate CA to operate as a financing company.
Securities Regulation Code and SEC Rules
- The SEC is the primary regulator of lending and financing companies (other than banks and certain other financial institutions regulated by the Bangko Sentral ng Pilipinas).
- SEC issues memorandum circulars on online lending platforms, advertisements, reporting, and unfair collection practices, among others.
- SEC also issues advisories and cease-and-desist orders against unregistered/illegal entities.
Bangko Sentral ng Pilipinas (BSP)
- Regulates banks, quasi-banks, money service businesses, credit card issuers, and certain special lending arrangements.
- If a lender is a bank or a BSP-supervised financial institution, it is not a “lending company” under RA 9474; it is governed by banking laws and BSP regulations.
- However, the same practical due diligence steps (checking if it is in the official list of supervised institutions) apply.
Consumer Protection Laws
- Truth in Lending Act (RA 3765) – Requires creditors to disclose finance charges, interest rates, and total cost of credit, typically in writing before or when the loan is granted.
- Consumer Act of the Philippines (RA 7394) – Provides general protections against misrepresentation, unfair or unconscionable sales or credit practices.
- Data Privacy Act of 2012 (RA 10173) – Regulates the collection and processing of personal data; abusive access to contacts, photos, or social media and harassing messages may also implicate data privacy violations.
Local Government and Business Regulations
- Legitimate lenders operating physical branches need appropriate business permits from LGUs (mayor’s permit, barangay clearance, etc.) in addition to SEC/BSP registration.

III. SEC Registration vs. Certificate of Authority: Two Different Things

A common confusion is thinking that “registered with SEC” automatically means a company is legally allowed to operate as a lending company. That is not enough.

SEC Registration as a Corporation
- Any corporation (of any line of business) must first be incorporated and registered with SEC.
- SEC issues a Certificate of Incorporation (or Certificate of Filing of Amended Articles, etc.).
- This registration alone only proves that the corporation exists as a legal entity.
Certificate of Authority (CA) to Operate as a Lending or Financing Company
- Under RA 9474 and RA 8556, a corporation that wants to engage in lending or financing as its primary business must also secure from SEC a separate Certificate of Authority to Operate as a Lending/Financing Company.
- Without this CA, a corporation cannot legally operate as a lending or financing company, even if it is SEC-registered as a corporation.
Minimum Capital and Name Requirements (for lending companies under RA 9474)
- Must have a minimum paid-in capital (historically at least ₱1,000,000; check current regulations for updated thresholds).
- The corporate name must contain the words “Lending Company” or “Lending Investor” (or similar term required by SEC), to identify its nature of business.
- Failure to include this may be a red flag, unless it is a bank or a financing company with a different naming rule.
Online Lending Platforms (OLPs)
- If a corporation operates online lending apps or websites, the SEC may require that each online lending platform be separately registered and disclosed to the SEC.
- Some companies are legitimate but operate unregistered apps or change app names to evade consequences—this is a huge red flag.

Key takeaway: For legitimacy, you must verify (a) SEC corporate registration and (b) the existence and status of the Certificate of Authority as a lending or financing company, and, where applicable, (c) the registration/approval of its online lending platforms.

IV. How to Check if a Lending Company Is Legitimate and SEC-Registered

Below is a practical, step-by-step due diligence process that any borrower can follow.

Step 1: Get the Exact Legal Name and Basic Details

Before any online search or verification, obtain the following from the lender:

Full corporate name (not just their brand name or trade name)
Registered address (principal office)
Business nature (lending company, financing company, bank, cooperative, etc.)
SEC registration number
Certificate of Authority number (for lending/financing companies)
For online lenders: the name of the app(s) and website URL(s) they use

Ask for clear copies or photos of:

SEC Certificate of Incorporation
SEC Certificate of Authority to Operate as a Lending/Financing Company
Mayor’s permit and other local business permits
For banks or co-ops: necessary BSP/cooperative authority documents

A legitimate lender should be willing and able to provide these without hesitation.

Step 2: Verify Corporate Existence and Status with the SEC

Although the specifics of the verification tools and fields may change over time, the general process is:

Go to the SEC’s official online channels.
Use the public search facilities to look up the corporate name or SEC registration number.
Confirm that:
- The spelling of the corporate name matches exactly;
- The entity is “registered” or “active,” not “revoked,” “suspended,” or “expired”;
- The principal office listed is consistent with the address given to you.

If there is no record at all matching the corporate name (or number), that is a major red flag. The lender may be:

Using a fake SEC number,
An unregistered entity, or
A sole proprietorship registered only with DTI and not allowed to be a lending company under RA 9474.

Step 3: Check for a Valid Certificate of Authority (CA)

Next, you should verify whether the corporation has a valid CA to operate as a lending or financing company, and whether it has been revoked or suspended.

Use official SEC lists or verification facilities that show registered lending/financing companies and those with revoked Certificates of Authority.
Confirm that:
- The corporate name appears in the list of registered lending/financing companies, not only in the general list of corporations.
- The CA is active (not revoked or expired).
- The CA number and issuance date, if displayed, match the copy provided by the company.

If the company is present only in revocation/advisory lists, or the SEC has issued a cease-and-desist order against it, you should avoid dealing with that lender.

Step 4: Distinguish Legitimate Banks, Financing Companies, and Cooperatives

Not all lenders fall under RA 9474. Some are supervised by other bodies:

Banks and BSP-Supervised FIs
- Check if it is listed as a bank, rural bank, thrift bank, or other BSP-supervised financial institution.
- Banks will have BSP licenses and are subject to more stringent regulation.
Cooperatives
- Credit cooperatives are usually registered with the Cooperative Development Authority (CDA).
- They are governed by cooperative law and their own bylaws.
Microfinance NGOs
- Some microfinance institutions operate under special laws or registrations (e.g., microfinance NGO law, Foundations).
- They still must have proper registration, and often some oversight or accreditation.

If the entity claims to be a bank or cooperative, confirm its status with the proper regulator, not just the SEC.

Step 5: Verify Online Lending Apps and Websites

When dealing with online lenders:

Match the App/Website Name to the Registered Entity
- The app or website should clearly disclose the registered corporate name, SEC registration number, CA number, and contact details.
- Be wary if only a brand name is shown, or if the disclosures are incomplete or hidden.
Check if the App/Platform is Properly Registered with SEC
- SEC may maintain lists of registered Online Lending Platforms (OLPs) and apps that have been ordered taken down or penalized.
- If an app is known to be part of an entity whose CA has been revoked or has been the subject of enforcement actions, treat it as unsafe.
Beware of Clone Apps and Multiple Similar Names
- Scammers may create apps with similar names to legitimate lenders.
- Always cross-check the corporate name and disclosed SEC/BSP details, not just the brand or app icon.
Review Permissions Requested by the App
- While not purely a legal check, an app that requests unnecessary access to contacts, photos, or files may be preparing to engage in harassing collection tactics.
- Excessive permissions may also indicate data privacy issues.

Step 6: Review the Loan Documents and Disclosures

Even if registration appears valid, you must check whether the lender complies with disclosure and consumer protection requirements.

Written Loan Agreement
- There should be a clear, written contract (physical or electronic) stating:
  - Loan amount
  - Interest rate (per month or per annum)
  - Other finance charges and fees (processing fees, service fees, penalties)
  - Repayment schedule and due dates
  - Collateral or security (if any)
  - Default, acceleration, and penalty provisions
Truth in Lending Disclosures
- The lender should disclose the total cost of credit and effective interest in a clear manner, as required by RA 3765 and applicable regulations.
- Hidden fees, unexplained charges, or confusing structures are signs of bad practice.
Language and Readability
- Contracts should be in a language you can understand (usually English or Filipino).
- “Take it or leave it” forms are common, but provisions that are grossly one-sided or unconscionable may be invalid or illegal.
Consent for Data Use and Collection Practices
- Data collection and usage should be explained in a privacy notice that complies with the Data Privacy Act.
- Authorizations to contact your employer, relatives, or contacts should be limited and not used as tools for harassment.

Step 7: Check for SEC Advisories, Warnings, and Enforcement Actions

Even companies that were once registered can later:

Have their CA revoked or suspended
Be the subject of cease-and-desist orders
Be named in SEC advisories for illegal or abusive practices

As a due diligence step, search official SEC publications for:

Advisories naming the lender or its brand names
Orders specifically targeting their online platforms
Any mention of revoked Certificate of Authority or unlicensed lending activities

If the SEC has issued a public warning or order against a lender, treat that as a serious red flag, regardless of whatever documents they show you.

V. Red Flags that a Lending Company May Be Illegal or Abusive

Even without access to databases, you can spot warning signs.

No SEC/BSP/CDA Registration Evident
- They refuse or delay showing you their SEC certificates.
- The SEC registration number appears fake or does not match the company name.
- They insist, “We’re legit, no need to check.”
No Certificate of Authority for Lending
- They show only a Certificate of Incorporation, but no CA as a lending/financing company.
- The nature of business in their Articles of Incorporation does not clearly include lending/financing.
Use of Unregistered Trade Names or Multiple Shell Entities
- The brand name used in marketing or in the app does not appear anywhere in SEC records or in their corporate documents.
- They may use several names interchangeably to confuse borrowers.
Unreasonably High and Opaque Interest and Fees
- Daily or weekly compounding interest that becomes astronomical.
- Very high “processing fees” deducted upfront so you receive much less than the stated loan amount.
- No clear breakdown of charges, or refusal to issue a statement of account.
Harassing Collection Practices
- Threats, insults, or public shaming via SMS, calls, or social media.
- Messaging your contacts, employer, or relatives repeatedly.
- Threats of criminal cases or jail for simple non-payment of a purely civil loan.
Note: While fraud or issuance of bouncing checks can have criminal implications, mere inability to pay a loan is generally not a criminal offense.
No Physical Office or Fake Address
- They list an address that turns out to be non-existent or a random building where no such company is found.
- Customer service is reachable only through social media accounts or anonymous mobile numbers.
Pressure Tactics and “Too Good to Be True” Promises
- “Approve now, no documents, no questions!”
- “Guaranteed approval in minutes, no ID needed.”
- Pressure to sign or click “accept” immediately without reading.

VI. Legal Consequences for Unlicensed or Abusive Lenders

Unregistered and abusive lending companies, particularly those without CA, may be exposed to administrative, civil, and even criminal liability.

Under RA 9474 and RA 8556
- Operating as a lending or financing company without a CA is unlawful and subject to penalties, including:
  - Fines
  - Imprisonment (for responsible officers)
  - Closure of the business
- SEC may issue cease-and-desist orders, revoke registration, and impose sanctions.
Under the Securities Regulation Code and SEC Rules
- Misrepresentations, fraud, or illegal solicitation may be punished by severe fines and imprisonment.
Under the Consumer Act and Civil Code
- Abusive, unconscionable, or deceptive practices may entitle borrowers to damages and voiding of unconscionable provisions.
- Courts may reduce iniquitous or unconscionable interest rates and penalties.
Under the Data Privacy Act
- Unauthorized access, harassment using sensitive personal data, or misuse of personal information can result in administrative penalties from the National Privacy Commission (NPC) and criminal liability.
Under the Revised Penal Code and Special Laws
- In extreme cases, conduct may amount to grave threats, coercion, libel, unjust vexation, or cybercrime, depending on the manner and medium of harassment.

VII. Remedies and Where to Complain

If you suspect that you have dealt with an illegal or abusive lender, you can consider:

Securities and Exchange Commission (SEC)
- File complaints regarding:
  - Unregistered or unlicensed lending companies
  - Violation of RA 9474/8556
  - Unfair or abusive collection practices by SEC-licensed lending and financing companies
Provide as much detail as possible: corporate name, app names, screenshots, contracts, texts, and call recordings (if any).
Bangko Sentral ng Pilipinas (BSP)
- If the lender is a bank or BSP-supervised financial institution, file complaints regarding their lending and collection practices through BSP’s consumer assistance channels.
National Privacy Commission (NPC)
- For data privacy violations, such as:
  - Accessing your contacts without valid consent
  - Using your photos or personal information for harassment
  - Storing or sharing your personal data insecurely
Local Government Units and DTI
- For violations of business permits, unfair trade practices, or misrepresentation, you can also file with the City/Municipal Hall, barangay, and DTI.
Courts and Law Enforcement
- File civil actions for damages and injunctions.
- Report crimes such as threats, libel, or coercion to the PNP, NBI, or the prosecutor’s office.
- In some cases, barangay conciliation (katarungang pambarangay) may be a starting point for smaller disputes.
Credit Counseling and Legal Aid
- If you are overwhelmed by debt, consult:
  - Public attorneys (PAO), legal aid clinics, or private lawyers
  - NGOs or church/community groups offering financial literacy and debt advice

VIII. Due Diligence Checklist (Practical Guide)

Before borrowing, you can run through this checklist:

Identity & Documents
- Full corporate name
- Registered address
- SEC registration number (if applicable)
- Certificate of Authority (for lending/financing company)
- Business permits (mayor’s permit, etc.)
- For banks/co-ops: corresponding regulator registration
Regulatory Verification
- Company found in SEC or relevant regulator’s database
- CA status: active, not revoked
- No adverse SEC advisories or orders (or if there are, understand their implications)
Online Presence
- App/website displays complete corporate and SEC/BSP details
- App permissions are reasonable and not excessive
- No prior enforcement actions tied to the specific app/platform
Loan Terms
- Written loan agreement provided before disbursement
- Interest rate and all fees clearly disclosed
- Repayment schedule and penalties explained
- No obviously unconscionable interest or penalty rates
Collection Practices
- No threats, shaming, or harassment during application
- Privacy policy and consent documents are provided
- No blanket access to all contacts/photos without necessity

If you cannot satisfactorily tick these boxes, it is safer to walk away and consider borrowing from a bank, cooperative, microfinance NGO, or a clearly legitimate, SEC-licensed lending or financing company.

IX. Conclusion

In the Philippine setting, verifying the legitimacy of a lending company is not merely a formality—it is your first line of defense against abusive practices, illegal apps, and financial scams.

Remember:

Being SEC-registered as a corporation is not enough; a lender must hold a valid Certificate of Authority as a lending or financing company, or be under the supervision of the appropriate regulator (like the BSP or CDA).
Always scrutinize documents, online disclosures, and loan terms.
Pay close attention to red flags, including missing registration, lack of CA, harassing collection tactics, and opaque fees.
If you encounter abusive or illegal practices, there are regulators and legal remedies available.

Doing a few minutes of careful verification before you borrow can save you from months or years of financial and emotional stress.