The role of government in protecting citizens from illegal online loans

The community recently found out about the practice of illegal online borrowing. Some people had the false assumption that online loans from fintech companies could help solve their financial problems. On the contrary, the illegal practice of online borrowing actually harms the public by insulting and threatening it.

The people behind the illicit lending practice often operate under the guise of cooperative legal entities to convince people in financial distress.

Consequently, various social problems arise in the community. Some victims of depression cannot cope with the pressure of debt collectors and eventually decide to commit suicide.

To that end, government assistance is needed to protect the community from the dangers and dangers of illegal online loans.

Related News: The government will revoke permits from cooperatives doing illegal online loans

The Indonesian National Police (Polri) has also previously stated that the trend of illegal loans is very harmful to the community.

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

They also manipulated photos of clients to make them appear inappropriate and were then distributed to the client’s coworkers and family as a threat of immediate debt repayment.

Clients were often stressed, sick and also committed suicide because they were unable to cope with the pressure, Prasetya noted.

Related news: Illegal fintechs do not meet the legal requirements: Minister

Taking action against the threat of illegal online loans is a form of affirmation and protection for victims by the government, especially the police.

The Crime Director of Special Economy of the National Police Department of Investigation (Bareskrim) Whisnu Brigadier General Hermawan Februanto noted that a foreigner named WJ, aka JHN, was involved in the illegal loan.

Through a payment gateway company called Flinpay and the Joint-Owned Cooperative, called Inovasi Milik Bersama, the suspect recruited illegal lenders and founded illegal savings and loan cooperatives.

Related News: West Jakarta Police are investigating two reports of illegal loans online

Police report

The head of the Financial Services Authority’s (OJK) investment oversight task force, Tonggam L. Tobing, noted that 104 fintech companies now have 772,534 accounts, with a total outstanding distribution of Rs.26.098 trillion.

Tobing confirmed that a large number of online lending companies were due to easy access to the website, while police faced difficulties in taking them down as they had several servers stationed in other countries.

From the victim’s perspective, the rise in illicit loans is due to their lack of understanding of the legitimacy of companies and their urgent financing needs.

As of 2018, the task force has resolved 3,631 illegal loans online. Tobing exposed the features of illegal loans, such as no official approval, no management identity, and a clear office address, offered an easy lending process that only required an ID card, a picture of the borrower, and an account number.

Online illegal loan also does not give you clear information on borrowing costs and penalties. Companies also had access to customer phones.

To that end, Tobing has provided tips on how to deal with online loans. He urged people to borrow money only from fintech companies registered with OJK and to borrow according to their own needs and capabilities and production goals.

For those already dealing with online loans, Tobing suggested reporting concerns via email to [email protected] Online loan debtors are not advised to find a new loan to pay off their previous debt.

People who have received improper threats from the bailiff can block the number from which the threats were sent and inform all their contacts to ignore messages about their debt. It was also proposed to report the bailiff’s number to the police.

Social observer Dr. Devie Rahmawati noted that the reasons people use illegal online loans were their increased needs at low incomes, the over-consumption of the digital society, and neglect and poor knowledge of the financial area.

Related news: Beware of illegal online loan services

Removal of the registration number of the cooperative

Due to several illegal lending practices under the names of cooperatives, the Ministry of Cooperatives and Micro, Small and Medium Enterprises (MMŚP) removed and revoked the registration number of the cooperative (NIK) belonging to Spółdzielnia Oszczędnościowo-Kredytowa, which practiced illegal online loans.

The deputy for cooperatives at the Ministry of Cooperatives and the MSME, Ahmad Zabadi, said he has made serious efforts on his side to combat illegal online lending practices that use savings and loan cooperatives as a cover.

These illegal practices can damage the positive image of the cooperative and lower the level of public confidence in cooperatives in Indonesia.

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

This effort is a continuation of several notaries who authorized the deed of the Savings and Loan Cooperative, which was later used for illegal online lending practices.Related News: DPD Speaker expresses support for the police’s fight against illegal loans

One notary was able to approve 8 to 40 founding acts in 2020-2021.

The Ministry of Communications and Informatics also sent a letter to the Directorate General for IT Applications to adapt the new requirements for a savings and loan cooperative that was authorized as an electronic system operator (PSE).

This is in line with the Regulation of the Minister of Communications and Information Technology No. 5 of 2020 on the private scope of electronic system operators. The new regulation required cooperatives to complete a permit if they wanted to act as PSE.

As regulated in Art. 104 sec. 2 of the Regulation of the Minister of Cooperatives and MSME No. 9 of 2018 on the organization and development of cooperatives, it provided that “Cooperatives organizing savings and loan activities are required to have a permit to conduct loan activities issued by an authorized official”.

Zabadi and his team checked the One Office Building in South Jakarta, which is used by some 20 savings and loan cooperatives that conduct illegal online lending practices. His website also sent a team to search several virtual office buildings used by other Savings and Loan Cooperatives.

Related News: Police Chief Reveals How Fraudulent Loans Work Online

His team also explored the Space Inc building in western Jakarta and the Thamrin City building in central Jakarta.

These two locations were used as virtual office addresses by seven savings and loan associations that carried out illegal online lending practices.

Based on the results of the location survey by the team, it was found that some cooperatives actually leased a virtual office at this address, but did not extend the lease period.

In addition, there were several illegal loan companies that used fake addresses as their offices

Such facts require the government to act to protect citizens from the threat of illegal online loans.

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