Trap of Online Moneylenders

According to data from the Indonesian Internet Service Providers Association, as of February, the number of Indonesians who have accessed the internet has reached 202.6 million people.

The digital world has encroached into almost all aspects of human life, making it easier for people to work, innovate or obtain the products and services they need.

One of them is the financial services industry, which has become one of the business industries that have taken advantage of advances in digital technology to speed up business processes and services to consumers.

At present, we can see a growing number of digital banks, digital-based insurance services, financial technology (fintech)-based lending and payment platforms and many others.

The emergence of the IT-based financial services is inseparable from changes in the spending behavior of people who want easy access and convenience in conducting financial transactions.

Also read:

> Stimulus Has Begun to Bring Positive Impacts on Economy

> A Strategy Needed to Win Competition in Our Own Country

According to data from the Indonesian Internet Service Providers Association (APJII), as of February, the number of Indonesians who have accessed the internet has reached 202.6 million people. It means that internet penetration in Indonesia has reached 74 percent of Indonesia\'s 270 million population, so the internet is now considered a part of people\'s lives.

By looking at this data, it is not surprising that digital financial transactions have become very popular. This has also encouraged financial service providers to offer more digital-based financial services, so that consumers don\'t abandon them. However, the reality on the ground shows that many irresponsible parties have taken the advantage of people\'s digital behavior by providing digital financial services illegally and without a license.

The emergence of ‘Pinjol’

The presence of online lending services (Pinjol) is a manifestation of the rapid growth in the development of the digital technology. Online loan providers basically operate as peer-to-peer (P2P) online platforms.

So far, the market has been dominated by banks and pawnshops.

The online lending platforms have eventually emerged as new players in the financial services industry by offering various types of loans to the public. So far, the market has been dominated by banks and pawnshops.

The Pinjol has several advantages, including that it can be easily accessed through digital applications via mobile phones. It also offers simpler requirements. In addition, the online lending platform has become a solution for the lower-middle class who have had difficulty accessing financing from banks or pawnshops because they do not have sufficient collateral.

The existence of P2P-based loans has been regulated by the Financial Services Authority (OJK) through OJK Regulation No. 77/016 on IT-based borrowing and lending services. The regulation has several purposes.

First, to ensure that Pinjol have a strong institution, so that they are able to continue and develop. Second, customer protection should become part of the operation of online lending platforms, so that the rights and obligations of consumers will be protected.

Third, create a healthy lending industry that is able to contribute to development or fulfill the financial needs of the community. As of May, 81 online lending platforms have been registered with the OJK and 57 others have obtained licenses to operate.

KOMPAS/WISNU WIDIANTORO (

A resident shows an SMS that offers online-based loans, Jakarta, Sunday (16/6/2019).

In reality, however, many online lending platforms continue to operate illegally. They are not registered or have a license from the OJK. The emergence of illegal online lenders cannot be separated from the presence of digital technology. These include moneylenders and pawnbrokers who take advantage of digital technology to claim they are part of the industry.

Their presence often confuses potential borrowers because they can no longer distinguish between illegal and legal online lending platforms. Therefore, the public must be careful because such online loan providers do not have a permit and are not supervised by the OJK, which means consumer protection becomes unclear.

Choosing the Pinjol

The existence of online lending platforms is indeed needed because not all existing financial products and services are able to meet the financial needs of the people. However, on the other hand, borrowers must be sure that they are dealing with legal loan providers. We should not close our eyes to the fact that many potential borrowers do not have sufficient experience or knowledge about online lending services.

For this reason, people who want to take advantage of these services must remember the “2Ls”, namely legal and logical. They must ensure that they are dealing with an online lending platform that has obtained a license from the OJK to avoid becoming trapped by unlicensed moneylenders.

So far, the OJK and the Investment Alert Task Force have closed as many as 3,193 illegal online lending platforms.

To find out whether the online lending platforms are licensed or not, they can check the OJK website or by calling the OJK’s hotline: 157. Information from the public is urgently needed to take action against unlicensed moneylenders. So far, the OJK and the Investment Alert Task Force have closed as many as 3,193 illegal online lending platforms.

The logical aspect is related to the lending interest rate charged by the online loan providers, which often charge borrowers with unrealistically high lending rates, making it difficult for them to repay both the principal and the interest.

In addition, prospective borrowers must also be aware and need to know clearly whether there are other hidden costs that are not disclosed or are deliberately undisclosed by the loan providers. These costs usually include disbursement fees, late payment penalties, interest penalties and other costs.

Batman’s trap

The emergence of illegal moneylenders is sometimes very disturbing to the public because they often transfer money to our account without our prior consent and permission.

In fact, people who don\'t know about borrowing can accidentally click on the loan link offered by illegal online moneylenders.

For people who are in financial difficulties, this can become a Batman’s trap that will worsen their finances. In the end, they will receive a harassment from the illegal lenders, who often resort to invading their privacy. Their lives are often under threat.

By borrowing from licensed online moneylenders, the rights and obligations of borrowers are protected by clear terms and conditions. However, the public must also be aware about their obligation to repay their loan along with the interest payment.

Therefore, before borrowing money through an online lending platform, there are several things to think about. First, the loan should be used to meet our needs or for productive business activities, such as to increase business capital, school fees and repair houses. Second, don’t borrow money to buy unnecessary things or to be considered successful by those around us.

DOKUMENTASI AGUS SUGIARTO

Agus Sugiarto_

Third, prospective borrowers must be sure that they have the ability and capacity to repay the debt on time. Fourth, those who do not have the ability to pay their debts from online moneylenders are advised not to borrow at all because it can bring a severe financial problem.

Agus Sugiarto, Head of the Financial Service Authority (OJK) Institute

(This article was translated by Hendarsyah Tarmizi).