Illegal Online Loans (Pinjol) Don't Have to Be Paid, is it True?

PERTANYAAN

Is it true that if you owe money on illegal online loans, you don't need to pay off the debt?

INTISARI JAWABAN

In principle, online loans declared illegal, are not because of threats during the collection or imposition of high interest, but because the organizers of the online loans have not been registered and have not obtained a license from the Financial Services Authority (Otoritas Jasa Keuangan/ “OJK”).

Although online loans are illegal, this does not automatically become an excuse for not paying any debts or loans that have been granted. Why is that so?

Please read the review below for a further explanation.

ULASAN LENGKAP

This article is an English translation of Pinjol Ilegal Tak Usah Dibayar, Benarkah? which was written by Nafiatul Munawaroh, S.H., M.H, and was published on Tuesday, 28 February 2023.

This article below is an update of the article entitled Illegal Online Loans (Pinjol) Don't Have to Be Paid, is it True? (Pinjaman Online Ilegal Tidak Usah Dibayar, Benarkah?) which was first written by Erizka Permatasari, S.H., and was first published on Wednesday, 8 December 2021. 

All legal information available on Klinik hukumonline.com has been prepared for educational purposes only and is general in nature (read the complete Disclaimer). In order to obtain legal advice specific to your case, please consult with Justika Partner Consultant.

Online loans, a.k.a pinjaman online or pinjol in Bahasa, are now an alternative for people who need funds quickly and easily. This is because, in practice, loan disbursements are quick and the condition is simple, i.e. the borrower only needs to submit/enter a certain amount of data and a photo of the Identity Card (Kartu Tanda Penduduk/ “KTP”) in order to obtain a loan. It is the ease of procedures and requirements that encourage people to borrow money through online loans.

However, people need to be careful with the existing online loans by checking the legality of the online loan that will be addressed. In fact, what are the characteristics of illegal online loans? What differentiates them from legal online loans?

The Difference between Illegal Online Loans and Legal Online Loans

Principally, online loans declared illegal, are not because of threats during the collection or imposition of high interest, but because the organizers of the online loans have not been registered and have not obtained a license from the Financial Services Authority (Otoritas Jasa Keuangan/ "OJK").

Thus, the characteristics of illegal online loans are unlicensed and are not registered in OJK, while legal online loans are already licensed and registered in OJK. This is regulated under OJK Regulation 10/2022. However, it should be noted that under OJK Regulation 10/2022 the term online loans or pinjol is not recognized, but rather Information Technology-Based Co-Funding (Layanan Pendanaan Bersama Berbasis Teknologi Informasi/ "LPBBTI").

Information Technology-Based Co-Funding Services (Layanan Pendanaan Bersama Berbasis Teknologi Informasi), from this point onwards, is referred to as LPBBTI, is the provision of financial services to bring together funders and fund recipients in conducting conventional funding or based on sharia principles directly through an electronic system by using the internet.[1] LPBBTI may also be referred to as peer-to-peer lending or fintech lending or online loans.

An online loan shall be in the form of a limited liability company and must have paid-up capital of at least IDR25 billion at the time of establishment.[2] Article 8 section (1) OJK Regulation 10/2022 affirmed that the organizers that implement LPBBTI/ online loans business activities must first obtain a business license from OJK.

Furthermore, online loan organizers that have obtained a business license from OJK must submit an application for registration as an Electronic System Organizer to the authorized authority no later than 30 calendar days from the issuance date of the business license from OJK.[3]

Online loan organizers who fail to comply with the above provisions may be subject to administrative sanctions in the form of:[4]

1. written reprimands;
2. limitation of business activities; and/or
3. revocation of license.

Those administrative sanctions may be accompanied by the blocking of the Electronic Systems of Organizers.[5]

Also read: Risks of Debt Arrears and Illegal Online Loans Release Strategies

Do Illegal Online Loans Have to Be Paid?

If you've already been caught up in illegal online loans, is it true that illegal online loans don't need to be paid?

According to OJK Regulation 10/2022, online loan services basically bring together funders and fund recipients. Meanwhile, the online loan organizers provide, manage, and operate LPBBTI either conventionally or based on Sharia Principles.[6]

In the lending and borrowing agreements in the scope of online loans, there are two agreements that are conducted, namely an agreement between funder and organizer, and an agreement between funder and fund recipient.[7]

An agreement between the funder and organizer is in relation to the funding amount, commission amount, mechanism for funding collection, risk mitigation in the event of non-performing funding, etc.[8] Meanwhile, an agreement between the funder and fund recipient is in relation to the funding amount, installment value, related fees, fines, etc.[9] Based on this description, it can be concluded that the loan agreement is between the funder and the fund recipient, while the online loan parties are the parties that manage the funding from the funder.

Furthermore, under the article entitled Involved in Illegal Online Loan Debt, Here's How to Report any agreements which are made between lenders and recipients of online loans which are not registered and licensed in OJK may be revoked. This is because unlicensed online loan organizers are not authorized to act (handeling onbevoegheid), and this is causing the agreements between the lenders and recipients of loans to be canceled.

The same article clarifies that the consequences of said agreement may be annulled, i.e. the condition will return to its original state as before the agreement was made. Therefore, the borrower is obliged to return all the money that has been borrowed.

So in answer to your question, the borrower is obliged to return all the money that has been borrowed even if he/she borrowed through illegal online loans.

In order not to be caught in the trap of borrowing from illegal online loans, there is a list of licensed online loans from OJK that you may access through the List of OJK Licensed Fintech Organizers. From this page, you will be able to find a list of illegal pinjol by looking at licensed online loan organizers. If there is any unregistered online loan application/website, then the online loan concerned is automatically illegal.

Enrich your legal research with the latest bilingual legal analysis, as well as the collection of regulatory translations integrated into Hukumonline Pro, click here to learn more.

These are the answers we can provide, we hope you will find them useful.

Legal Basis:

1. Regulation of the Financial Services Authority of the Republic of Indonesia Number 10/Pojk.05/2022 of 2022 on Information Technology-Based Co-Funding Services.

Reference:

List of OJK Licensed Fintech Organizers, accessed 28 February 2023, at 09.31 West Indonesian Time (zone).

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[1] Article 1 number 1 Regulation of the Financial Services Authority of the Republic of Indonesia Number 10/Pojk.05/2022 of 2022 on Information Technology-Based Co-Funding Services (“OJK Regulation 10/2022”).

[2] Article 2 section (2) and Article 4 section (1) OJK Regulation 10/2022.

[3] Article 8 section (2) OJK Regulation 10/2022.

[4] Article 15 section (1) OJK Regulation 10/2022.

[5] Article 15 section (2) OJK Regulation 10/2022.

[6] Article 1 number 8 OJK Regulation 10/2022.

[7] Article 30 OJK Regulation 10/2022.

[8] Article 31 section (2) OJK Regulation 10/2022.

[9] Article 32 section (2) OJK Regulation 10/2022.