"The characteristics of illegal online loan services are indicated by high interest, unclear loan terms, and very easy lending," the head of the West Sumatra Financial Services Authority, Yusri, said in Padang on Tuesday.
"Additionally, other characteristics of illegal online loans are unlimited interest or borrowing costs, and the total return including unlimited interest," he informed.
They also omit to provide the company's address on the application or website, exclude contact numbers for complaints, and bill charges in an incorrect way, Yusri said.
Additionally, the management of such firms also asks for access to contact lists on mobile phone devices and other personal documents, he added.
"Usually they make offers via SMS, WhatsApp, or private communication channels without permission," he pointed out.
Yusri advised the public to borrow money from companies registered with the Financial Services Authority.
"Borrow according to (your) need and ability only for productive interests," he said.
He also stressed that the public must understand the benefits, costs, interest, terms, fines, and risks involved in taking out a loan.
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People who have already borrowed money from illegal online lenders must pay off the loan immediately to avoid an increase in the interest burden, he said.
They are also requested to report such firms to the Investment Alert Task Force, he said. If they have limited ability to pay back, it is best to apply for loan restructuring in the form of interest reduction, term extension, and elimination of fines, he added.
He also urged people to refrain from finding new loans to pay off old debt should they find themselves unable to pay the initial loan.
If the customers are threatened by unethical means, they must block all contact numbers from where threatening calls are received and notify all contacts on their phones to ignore messages related to the online loan, Yusri said.
As of October 6, 2021, the total number of fintech peer-to-peer lenders registered and licensed with the Financial Services Authorities stands at 106, Yusri informed.
As of August 31, 2021, the number of lenders offering legal online loan services has reached 749,175 with the number of borrowers reaching 68,414,603, he added.
The total funds that have been disbursed through legal online loan services have reached Rp 249.93 trillion (almost US$18 billion), with outstanding debt pegged at Rp. 26.09 trillion (around US$2 million).
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