Beware of Illegal Online Lenders in the Guise of Cooperatives

KOMPAS/PRIYOMBODO (PRI)

Various online loan applications on the Play Store.

There is a growing number of Illegal app-based lending platforms under the guise of cooperatives. Their existence should be monitored. In order not to be trapped, the legality of the entity can be checked on the OJKs website.

JAKARTA, KOMPAS — Vigilance is needed against the growing number of illegal app- based lending platforms under the guise of cooperatives. They operate as cooperatives but they do not have members and do not require mandatory savings.

The illegal app-based lenders, locally known as pinjol, short for pinjaman online, usually offer loans with high interest rates, and use intimidatory methods to collect the debts.

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The chairman of the Investment Alert Task Force (Satgas) at the Financial Services Authority (OJK), Tongam Lumbang Tobing, said the agency had blocked a total of 403 app-based lenders operating under the guise of cooperatives since 2018. That number accounted for 9.68 percent of the total app-based lending platforms blocked by the task force. The total number of the online lenders blocked from 2018 to August 2022 amounted to 4,160 entities.

ARIS SETIAWAN YODI

The chairman of the Investment Alert Task Force (Satgas) at the Financial Services Authority (OJK), Tongam Lumbang Tobing.

"The public need to be aware of the scams carried out by lenders under the guise of cooperatives. They operate as a cooperative to provide loans, but they are actually illegal online lenders," Tongam said during the opening of "Warung Waspada Pinjol" (Illegal Pinjol Alert Center) at the Gade Coffee & Gold shop in Jakarta on Friday (16/9/2022).

Not to mention the illegal app-based lenders also steal customer's personal data.

Tongam said that people borrowing money from illegal online lenders under the guise of cooperatives are charged high interest rates, starting from 1 percent per day. In addition, borrowers are only given about 14 days to pay up. If the debt is not paid within that time, they will be intimidated which is often accompanied by threats. Not to mention the illegal app-based lenders also steal customer's personal data.

In order to avoid the trap of illegal online lenders, Tongam appealed to the public to first check the legality of the entity on the OJK’s official website. Currently, 102 fintech companies are registered with the OJK. In addition, the OJK also publishes a list of illegal app-based lending companies that have been blocked.

To allow people easy access to file complaints related to online lending frauds, the OJK’s alert task force, in cooperation with the Criminal Investigation Agency (Bareskrim) of the National Police and other related ministries and institutions, officially opened on Friday the Illegal Pinjol Alert Center at the Gade Coffee & Gold on Jl. Kebon Sirih, Jakarta.

ADITYA DIVERANTA UNTUK KOMPAS

A loan-based fintech company, UangTeman, takes advantage of the convenience of borrowing through an application.

According to Tongam, in this shop, the task force receives people’s complaints related to illegal online lending and provides assistance in resolving cases of illegal app-lending platforms. In the next few

months, similar alert centers will be also opened in 45 other locations in a number of regions in Indonesia.

Meanwhile, a supervisor of cooperatives at the Cooperatives and Small and Medium Enterprises (UKM) Ministry, Masyirifah, said that illegal app-based lending companies under the guise of cooperatives did not carry out the actual function of cooperatives. They also did not reveal their addresses or names of the administrators.

“They also have no members and do not carry out their activities as a cooperative. They, instead, offer loans to non-members through app-based applications," said Masyirifah.

Meanwhile, according to investigators at the Special Economic Crimes Directorate of the National Police, First Insp. Eko Purwanto, who was present on behalf of his department, in 2022, there were 90 complaints related to online loans. Of this number, most of the cases have been taken to the court.

Eko said that based on the results of a number of investigations, online borrowers often experienced intimidation, harassment and threats from the app-based lending providers when collecting the debts.

The perpetrators were charged under the Electronic Transactions and Information Law, the Consumer Protection Law and the Money Laundering Law.

Funding needs

In addition to illegal online lending, Tongam and Eko also asked the public to be aware of investment scams. As of August 2022, the OJK’s alert task force had blocked and prosecuted 71 illegal investment companies and 426 illegal online lenders. Their scams have caused a financial loss of Rp 2.9 trillion (about US$194 million) to their clients.

The public needs to first check whether the entity is legally registered and licensed by the regulator.

In order to avoid the trap of illegal investments, Tongam appealed to the public to always remember the “2L” concept of legal and logical, before deciding to invest. The public needs to first check whether the entity is legally registered and licensed by the regulator.

In addition, the public also needs to examine with common sense, whether the offer is logical. Investment offers that are far-fetched or high-yield and unreasonably high, are most likely bogus investment offers.

Separately, a digital economy researcher at the Institute for Development of Economics and Finance (Indef), Nailul Huda, explained that illegal online loans were still widespread even though 4,160 entities had been down from 2018 to August 2022 showing several phenomena in the financial services industry and funding needs in society.

KOMPAS/ADITYA PUTRA PERDANA

The debt collector suspect (far right) was presented in an exposure to an online loan collection case at the Central Java Police Headquarters, Semarang City, on Tuesday (19/10/2021).

Nailul said that illegal online lenders were still rampant because of the huge funding needs in the community, while many people were still considered as unbankable or underbanked, meaning they do not meet banking requirements to obtain loans. As most of them do not have adequate collateral, they are considered to have insufficient capacity to repay their loans.

(This article was translated by Hendarsyah Tarmizi)