CHARACTERISTIC OF ILLEGAL ONLINE LOANS IN INDONESIA

Abstract

Financial technology (fintech) involves providing financial services through advanced software and technology, with online loan providers utilizing information technology to offer streamlined services that are particularly useful in urgent situations requiring immediate funding. In Indonesia, the rapid expansion of online lending by fintech companies has exceeded expectations, yet many consumers overlook the legality of these institutions. This research seeks to identify the main characteristics of illegal online loans in Indonesia and the legal responsibilities of their providers. Utilizing a normative research approach that examines legal norms such as statutes, regulations, judicial decisions, and societal norms, the study finds that illegal online loans are often characterized by their lack of authorization from the Financial Services Authority (OJK), typically due to providers failing to meet regulatory requirements. The research further highlights that fintech operations, including peer-to-peer lending, are governed by OJK Regulation 77/POJK.01/2016 concerning Information Technology-Based Lending and Borrowing Services, and that illegal loan providers may face administrative, criminal, and civil sanctions.

Keywords

• financial technology
• responsibility
• illegal online loans