The role of government in protecting citizens from illegal online credit

The community has recently become aware of the practice of illegal online lending. Some people mistakenly assumed that online loans from financial technology (fintech) companies could help solve their financial problems. On the contrary, the illegal online lending practice actually harms society by offending and threatening it.

These individuals, who are behind the illegal lending practice, often operate under the guise of co-operative legal entities to convince people in financial difficulty.

As a result, various social problems arise in the community. Some depressed victims cannot stand the pressure of debt collectors and eventually decide to commit suicide.

To that end, government help is needed to protect the community from the threats and dangers of illegal online credit.

Related news: Government revokes cooperatives that operate illegal online lending

The Indonesian National Police (Polri) had also previously stated that the trend towards illegal credit was very harmful to the community.

The head of Polri’s public relations department, Inspector General Dedi Prasetya, confirmed that the police had paid special attention to the illegal online loan collection process, which is often carried out under threat.

They also manipulated customer photos to make them appear inappropriate and were then distributed to the customer’s co-workers and family to threaten them with immediate payment of their debts.

The customers are often stressed, got sick and have committed suicide because they are not up to the pressure, stressed Prasetya.

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Tackling the threat of illegal online credit is a form of endorsement and protection for victims by the government, particularly the police.

The Director of the Criminal Police Special Economy of the Criminal Police (Bareskrim) Brigadier General Whisnu Hermawan Foreno noticed that a foreigner named WJ, aka JHN, was involved in the illegal loan case.

Through the payment gateway company called Flinpay and the joint-owned cooperative called Inovasi Milik Bersama, the suspect recruited illegal lenders and founded illegal savings and credit unions.

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Police report

Financial Services Authority (OJK) Head of Investment Surveillance Task Force Tonggam L. Tobing found that 104 fintech companies currently have 772,534 accounts with total payouts outstanding of Rs 26,098 trillion.

Tobing confirmed that the high number of online loan firms was due to easy access to the site, while the police struggled to get rid of them as they had multiple servers stationed overseas.

From the perspective of victims, the rise in illicit lending is due to their lack of understanding of the legality of businesses and their pressing financial needs.

As of 2018, the task force had canceled 3,631 illegal online loans. Tobing revealed the characteristics of illegal loans, such as the lack of official authorization, no management identity, and a unique office address.

Even the illegal online loan does not provide clear information about the cost of the loan and the penalty. The companies also had access to customers’ phones.

Tobing also gave tips on dealing with online loans. He urged people to only borrow money from the fintech companies registered in the OJK and borrow according to their needs and skills as well as productive purposes.

For those already dealing with online credit, Tobing suggested reporting the issues to waspadainvestasi@ojk.go.id by email. People who are in debt with online loans are not advised to find a new loan to pay off their previous debts.

Individuals who have received inappropriate threats from a debt collection agency can block the number the threats were sent from and notify all of their contacts to ignore messages related to their debt. It has also been suggested to report the collection company’s number to the police.

The social observer Dr. Devie Rahmawati noted that the reason for using illegal online lending is because of their increased needs in the face of low incomes, the overconsumption of the digital society, and their negligence and lack of knowledge of finance.

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The removal of the cooperative registration number

Due to several illegal lending practices under cooperative names, the Department of Cooperatives and Micro, Small and Medium Enterprises (MSMEs) would delete and delete the cooperative registration number (NIK) that belonged to the savings and credit cooperative that practiced illegal online lending.

The deputy cooperative member in the Ministry of Cooperatives and MSMEs, Ahmad Zabadi, spoke of his serious efforts to combat the existence of illegal online lending practices under the guise of the savings and credit cooperative.

These illegal practices can tarnish the positive image of cooperatives and reduce public confidence in cooperatives in Indonesia.

In addition, the Ministry of Cooperatives and MSMEs held a meeting with the Central Board of the Indonesian Notaries Association (PP-INI) in order not to issue a cooperative deed immediately without a clear verification.

These efforts are a follow-up to the several notaries who authorized the savings and credit union deed that was later used for illegal online lending practices.Similar news: DPD spokesman supports police action against illegal loans

A notary could approve eight to 40 foundation documents between 2020 and 2021.

The Ministry of Communications and Information Technology had also sent a letter to the Directorate General for Information Technology in order to adapt the new requirements for the savings and credit cooperative, which is licensed as an electronic system operator (PSE).

This is in line with Regulation of the Minister of Communications and Informatics No. 5 of 2020 on the private scope of operators of electronic systems. The new regulation requires the cooperatives to comply with the permit if they want to operate as a PSE.

According to Article 104, Paragraph (2) of the Regulation of the Minister of Cooperatives and MSMEs No. 9 of 2018 on the organization and development of cooperatives: “Cooperatives that organize savings and loan transactions must have a savings and loan issued by an authorized officer Business license “.

Zabadi and his team had reviewed the One Office Building in South Jakarta, which is used by around 20 savings and credit unions that engage in illegal online lending practices. His site has also dispatched a team to search multiple virtual office buildings used by other savings and credit unions.

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His team had also examined the Space Inc Building in West Jakarta and the Thamrin City Building in Central Jakarta.

The two locations were used as virtual office addresses by seven savings and credit unions that operated illegal online credit business practices.

Based on the results of the location determination by the team, the information emerged that some cooperatives had rented a virtual office at this address, but did not extend the rental period.

In addition, there were several illegal online lending companies using fake addresses as offices

Such facts call for government action to protect their people from the threat of illegal online credit.

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