As Indonesia’s fintech ecosystem matures, criminals are also developing ways to do business in space. This has led to the victimization of unintentional users, and the problem is widespread. The Ministry of Informatics blocked 1,856 unlicensed fintech lending platforms in 2021 and nearly 4,900 illegal lending platforms since 2018. However, this has not slowed the proliferation of illicit lending apps that have emerged. attack financially vulnerable Indonesians.
Online loan sharks operate by providing quick loans for small amounts, typically in the range of IDR 1-3 million ($ 70-210), with exorbitant penalties and interest rates well above the daily rate. maximum of 0.8% of the OJK. They access all the data on the borrower’s phone and abuse it to terrorize the borrower if they don’t pay off the debt. Debt collectors harass borrowers with threats of violence and humiliation, or say they will share personal photos and videos of borrowers, or even compromising images that are tampered with, with their contacts. Since 2019, OJK has received over 19,000 consumer complaints about illegal lenders.
This problem is so persistent that it has caught the attention of President Joko Widodo. On October 15, the president hold a meeting with the relevant authorities – the OJK Financial Services Authority, the Ministry of Informatics and the National Police Chief – and ordered them to take stronger action against illegal fintech companies that pose a threat to them. low income communities.
The president’s order led to a massive investigation into the activities of online loan sharks. During the past two weeks, the police raided and arrested dozens of employees of unlicensed lenders in numerous cities, including Jakarta, Yogyakarta and Surabaya. For example, during the raid from a company called Ant Information Consulting last week, police found pornographic photos that had been altered so that the individuals depicted look like people who had taken out loans. An employee who was arrested said the photos were used as a tool of intimidation. The police are still looking for the owner of the business.
Bhima Yudhistira Adhinegara, director of the Center for Economic and Legal Studies (Celios), said the arrest of employees and debt collectors from illegal lenders was not enough to stop the practice. “Data from the Ministry of Informatics showed that 78% of illegal lenders operate using servers overseas, such as in China, the United States, or Singapore. I think international cooperation is necessary to eradicate illegal loans, ”he said. KrASIA.
Government and other stakeholders, including fintech companies, also need to develop ways to help consumers understand the ins and outs of online lending, as financial literacy is crucial when using of these services, Adhinegara added. “So far, public education efforts have not kept pace with illegal lenders who use SMS to market their products. The government should cooperate with telecommunications operators to provide regular and large-scale SMS warnings and education. “
In addition, the personal data protection bill must be passed as soon as possible, Adhinegara said, because many unregistered lenders illegally obtain data from potential customers.
As part of efforts to shut down online loan sharks in Indonesia, the government will also impose a moratorium on licensing fintech lenders. In this way, authorities can divert resources to eliminate illegal platforms. OJK revoked the licenses of dozens of fintech lenders this year. According to the most recent count that took place on October 6, there are 106 fintech loans registered and authorized platforms in the country, against 149 platforms who were on the list in December 2020.
Adhinegara approved the government’s plan to suspend new licenses for fintech lenders. “We already have too many players at the moment so it’s hard to supervise,” he said, indicating that the supervision process requires a significant budget and many resources from the OJK. Adhinegara expects fintech lenders to merge or be acquired by larger players. “At the end of the day, we may only have 20 or so platforms that survive and dominate the market,” he said.