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View all search resultsHow consumer rights are protected in financial transactions
The critical role of consent in financial transactions and how Indonesian regulations are working to protect consumers are pressing issues in the increasingly digital world.
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A customer scans a Quick Response Indonesia Standard (QRIS) code on July 7, 2024, to settle a transaction at Imah Kopi coffee shop in Gunung Karang, Pandeglang regency, Banten. (Antara/Muhammad Bagus Khoirunas)
I
n our increasingly digital world, the simple act of tapping a screen can trigger major financial consequences. A recent post that went viral on Indonesian social media brought this to light. A consumer alleged she/he never gave consent for a financial transaction made in her/his name.
While we are not here to weigh in on that particular case, it does highlight an issue that affects all of us significantly in this digital era where a transaction can easily be completed in seconds through digital platforms: the critical role of consent in financial transactions and how Indonesian regulations are working to protect consumers.
Under Indonesian law, a valid agreement must satisfy four key requirements: consent of all parties involved; legal capacity of the parties; a clear and specific object of the agreement; and the transaction arising from the agreement must not be contrary to law or public order. If any of these requirements are missing, the agreement can be declared null and void.
Among these, consent is particularly central in financial transactions where the products and/or services may involve complex structures, multiple parties and future obligations.
Consent must be genuine and mutual especially with respect to the subject matter of the transaction. If one party misunderstands or is unaware of the subject matter of the transaction, the agreement could potentially be invalidated because of the absence of consent.
In practice, however, invalidating a transaction over lack of consent is not a walk in the park. It is a long and winding road as it involves a lengthy and costly court process, something that can be overwhelming particularly if that party is a layman individual going up against a large financial institution.
Hence, the doctrine of law endeavors to rectify the situation by introducing a caveat vendor (let the seller beware) principle. Traditionally, the legal doctrine caveat emptor (let the buyer beware) is introduced to put the burden on the buyer to understand what she/he is getting into.
