Indonesian Goverment Appeals to Victims of Illegal Online Lendings to Stop Paying Debts Even if Billed

Indonesian Financial Services Authority (OJK) supports the government's appeal asking the public not to pay their debt and interests if they have already borrowed money from illegal online lending services.

The government asks victims who borrowed from illegal online lending companies to report to the police station if they receive threats from debt collectors. 

In the fight against illegal online lending companies, the government and the OJK decided to impose multiple civil and criminal articles for the perpetrators. 

Perpetrators of the illegal online lending will be subjected to punishments for acts of extortion, unpleasant acts, as well as electronic information and transactions law (ITE Law) and consumer protection law violations.

Central Java Chief of Police in a press conference regarding illegal online lending. (Photo: Indonesian Police news channel)

Quoted from Kompas, The chairman of the OJK's Investment Alert Task Force, Tongam Lumban Tobing, emphasized that the government's appeal for the public to stop paying principal and interest of illegal online loans has a legal basis.

 "From a civil law point of view, this illegal online lending does not meet (is not considered as) an agreement in accordance with Article 13 of the Civil Code," said Tongam, on Thursday (21/10/2021). 

He said, in the Civil Code, it was explained that monetary loans could be made on condition that there was an agreement between the parties, in this case the illegal online lenders as the first parties and the borrowers( debtor) as the second parties. 

However, Tongam explained, these illegal online lenders are not registered in the government administration or the OJK, so the agreements between the parties in the eyes of the civil law are considered invalid.

"There is no agreement between the parties. Because there is no equality..." said Tongam.

He stated that the illegal status makes the online loan company not recognized as an object of civil law.

This unofficial status, according to OJK, makes all debt agreements between customers and online lenders become illegal in the eyes of the law. 

"(The company) is not legal, but illegal. So this (debt) agreement is not valid," Tongam explained. 

In addition to civil law, Tongam also said that illegal online lending also violates criminal provisions. So, both civil and criminal, all illegal online loan agreements are considered invalid in the eyes of Indonesian law. 

And from a criminal point of view, illegal online lending services also commit extortion based on the Article 368 of the Criminal Code and unpleasant acts of Article 335, as well as violations of the ITE Law and consumer protection," said Tongam. 

"Affirmation for people who have already borrowed illegal loans, there is no need to pay because from the point of view of criminal and civil law they do not meet the requirements," he said again.

On Teusday (19/10/2021), Coordinating Minister for Political, Legal, and Security Affairs Mohammad, Mahfud MD, have asked the customers of illegal online lending companies to stop pay their debts even if billed.

On Wednesday (20/10/2021), the Indonesian Consumers Foundation (YLKI) welcomed Mahfud's statement. The member of YLKI Complaint Team, Rio Priyambodo stated that with adequate funding capabilities, the illegal companies can easily create a new online lending platform. By not paying debts to illegal the online lenders, the public indirectly participate in efforts to eradicate the harmful practice.

Quoted from Antara, The Director of Special Criminal Investigation of the West Java Police, Kombes Pol Arif Rachman, said that people who borrowed only Rp5 million in illegal online loans, in one month the interest could reach up to Rp80 million. Interests from illegal online loan is up to 10 percent per day.