O

nline lending platforms that have been mushrooming in the country since 2013 may have helped many people who lack access to regular financial services by giving them instant loans, but they have also brought sorrow to those already shackled by debt.

The Jakarta Legal Aid Institute (LBH Jakarta) has recorded a surge of reports against online lending platforms for trapping customers into spiraling debt and for allegedly using abusive debt collection methods, including intimidation, violation of privacy and scare tactics. As of January, the institute received more than 979 complaints from debtors in Jakarta alone.

This dire situation was highlighted by the apparent suicide of a 35-year-old taxi driver named Zulfadli on Monday, who hanged himself in a friend’s rooming house on Jl. Mampang Prapatan in South Jakarta. He left a note explaining that he could no longer face his piling debts from online lending platforms.

In the note, Zulfadli pleaded with the Financial Services Authority (OJK) to put a stop to app-based lending companies, which he referred to as a “devil’s trap”.

“Dear online loan sharks, we will meet in the afterlife,” he reportedly wrote in the letter.

Zulfadli also said he was sorry for being a burden to many people and left a message to his wife and children, who live in Parung district, Bogor, West Java, instructing them to not pay off his debt.

“There is no one else involved but me,” the 35-year-old driver wrote.

“He never complained to his friend about his financial situation beforehand,” Insp. Anton Apriyanto, the head of the Criminal Investigation Unit of the Mampang Police, told The Jakarta Post on Wednesday.

LBH Jakarta lawyer Jeanny Sirait said that some debtors who had come to her had told her alarming things, like “I am depressed”, “I want to sell myself”, or “I want to die”.

“That was what many victims told me,” Jeanny said, adding that there were probably many people like Zulfadli in the Greater Jakarta area. “One day, when I had not responded to chat [messages] for two days, a person said to me that he would commit suicide on the third day if I didn’t respond.”

Jeanny added that the institute had met with OJK officials in January, but they had given no satisfactory response. They had only requested more information about the complaints received by the institute from all over Indonesia, which as of January totaled more than 2,000.

“We refused to give it out because we don’t want them to solve the cases. We want the OJK to change the system,” she said.

Jeanny said the OJK was assuming that aggressive debt collectors were only used by illegal online lending platforms, even though legal platforms also employed them.

“The OJK should control everything; don’t discriminate between them like that,” Jeanny said.

Tongam Lumbun Tobing, the chair of the OJK’s Investment Alert Task Force, said that the OJK and the Indonesian Fintech Lender Association (AFPI) were gathering information on the lending platforms that Zulfadli had used. He said he assumed his case might involve an illegal lending platform.

“Legal fintech is not allowed to copy contacts and access files or images from a customer’s phone. This [suicide] is a lesson for us to immediately stop using illegal lending platforms and choose ones that are registered by the OJK,” Tongam said.

However, a debtor, who asked to only be identified as SN, said she had downloaded one of the online lending apps that had been registered with the OJK when she needed money to pay for necessary medication and
for transportation to and from the hospital.

SN said she only needed to download the app onto her phone and upload her identification and bank account number before she applied for the loan.

The Rp 1 million (US$68) loan she requested arrived in her account only hours after she filled out the form on the app.

Despite the few requirements fintech firms impose on borrowers, they charge very high interest rates. SN said she had to pay a rate of more than 20 percent and she had to repay the loan about a month after she applied.

The rate is much higher than those charged by credit cards, which range from 1.5 to almost 3 percent per month.

SN said she also had to pay an additional fee of 1 percent per day when she was overdue with her repayment, making her debt go higher and higher every day she delayed paying.

Aside from the interest rate and late fees, the 32-year-old mother of two also had to endure intimidating phone calls and text messages from debt collectors hired by the app to pressure her to pay. They even made her lose her job.

“The debt collector called my supervisor at work, saying that I listed her name to be my guarantor while, in fact, I never did that,” she said, adding that the app gained access to her list of contacts in order to make her pay what she owed.

As many as 99 fintech lenders were registered with the OJK as of February. The OJK found 635 illegal lending companies and put 231 of them out of business in January.

Tongam said the OJK was not responsible for dealing with the intimidation employed by online lending platforms, so he asked victims to report their cases to the police.

“The OJK only has authority over matters that are related to loan disputes,” he said. (ggq)

— Riska Rahman contributed to this story