Women risk and consumer protection in online leading platforms in Indonesia

MSC conducted a study that delves into women’s experiences as users of online lending platforms in Indonesia. We ran the study in collaboration with the Department of Criminology of the University of Indonesia, with support from Indonesia’s Ministry of Women Empowerment and Child Protection (MoWECP). In the study, we used a gender lens to examine the risks in online lending platforms unique to women. The study findings led us to distill recommendations to improve the future of online consumer protection in Indonesia.

The financial technology (FinTech) industry has flourished amid the Indonesian digital economy’s significant growth. FinTech companies, regulated by Indonesia’s Financial Services Authority (OJK), conduct digital payments, online loans, and financial planning activities. Among these, online lending has grown rapidly since its outset in 2016. OJK’s data revealed that the amount of fintech lending rose from just IDR 10,917.5 billion in 2020  (~USD 694,552,640.40) to IDR 89,951.83 billion in May 2022 (~USD 5,723,231.980). The statistics also reveal a growing number of female borrowers on various online lending platforms—9,498,405 in 2021, compared to 7,785,569 male borrowers. Since online loans by nature are easy and fast to obtain, they have proved to be highly attractive for women who lack access to formal loan products.

However, although online loans lead to financial inclusion opportunities for women, they also come with drawbacks. OJK reported 19,711 complaints against illegal loan platforms from 2019 to 2021, with 52.97% suggesting minor to moderate violations and 47.03% reporting serious violations. The Chief of Indonesia’s Consumers Association (YLKI) stated that both legal and illegal loan platforms use threats, violence, and disclosure of borrowers’ personal information as persecution. Various online media sources also reported that online loan consumers have voiced concerns about the high-interest rates.This current situation among women and online lending platforms has prompted MSC and the Department of Criminology, University of Indonesia, to initiate research into this issue. The study will help us understand the restrictions and restraints, and how enforcing a comprehensive consumer protection system helps to minimize the risk. The research uses a qualitative approach through in-depth interviews and FGDs to engage with various stakeholders, such as FinTech policymakers, the Indonesian national police, and representatives from the association of P2P lending businesses.

The report dissemination event was held in Jakarta on 21st March 2023. A public discussion also took place at the event, with panelists from Indonesia’s financial services authority (OJK), the legal aid foundation  (LBH), the Indonesian Joint Funding Fintech Association (AFPI), and MoWECP.

We hope that the findings from this study will form a basis for more gender-responsive and socially-inclusive regulations, especially for vulnerable groups, such as women and people from lower income groups.

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