The unlicensed companies were discovered by the Investment Awareness Task Force of the Financial Services Authority (OJK).
Director general of informatics applications at the ministry, Semuel Abrijani Pangerapan, said that the government has made several endeavors to eradicate illegal fintech (financial technology) lending.
"Starting from blocking to law enforcement efforts," Pangerapan explained in a press release issued here on Tuesday.
From 2018 to August 2021, the Investment Awareness Task Force has blocked 3,515 illegal fintech lenders, he informed.
According to him, the most effective key to eradicating illegal fintech lending is increasing financial literacy in the community.
"The main key in exterminating illegal fintech lending is by literacy to the public so that the market of illegal fintech players will disappear by itself," he expounded.
Fintech P2P lending applications attract the public because they provide easy access to online loans, he noted.
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However, he argued, if people borrow money through illegal P2P lenders, there is a negative impact, such as threats and intimidation, if they fail to pay dues.
Taking note of thriving illegal fintech P2P lending, head of the Investment Awareness Task Force, Tongam L. Tobing, said the trend is very troubling even in the midst of the COVID-19 pandemic, when there are still lenders offering loans without permission.
"Currently, there are offers of illegal fintech lending that take advantage of some people's financial difficulties in meeting their daily needs," he added.
According to him, there are several modus operandi that unlicensed fintech entities use to ensnare people.
"Their target is people who need money to meet basic needs in this pandemic. They charge high interest rates with short loan periods," he expounded.
These illegal fintech providers offer easy terms and conditions for getting loans, but they always ask permission to access all contact data of the application users, he added.
"This is very dangerous because the data can be disseminated and misused to intimidate people when billing them," he warned.
Tobing lauded the efforts made by the Ministry of Communication and Informatics in eradicating illegal fintech P2P lending through access blockage.
Unlicensed activities are very worrying and harmful for the community because they take advantage of people's lack of understanding of financial literacy and deceive them by offering nonsense high returns, Tobing said.
"Many illegal activities duplicate the websites of licensed entities, making it (seem) as if the website officially belongs to the illegal entity," he explained.
"Investment offers through Telegram are illegal so it is hoped that the public will remain vigilant in considering such offers," he reminded.
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