Legal Protection of Customers Against Illegal Digital Lending Practices in the Digital Economy (International Journal for Science Review)

Summary

• The study conducts qualitative normative juridical research to analyze Indonesia's legal framework regarding consumer rights, personal data protection, law enforcement, and remedies against illegal digital lending.p.3
• Extracted literature and legal materials were analyzed across 4 core categories: substantive consumer rights, personal data protection, regulatory/law enforcement, and access to remedies.p.4
• Unauthorized P2P lending operators operate outside established supervisory frameworks, creating significant difficulties for regulatory intervention and enforcement.p.5
• Personal data misuse by illegal lending applications extends consumer harm beyond financial loss to long-term risks affecting privacy, dignity, and personal security.p.6
• Measures aimed strictly at restricting illegal platform operations fail to resolve existing financial losses or privacy violations already experienced by victims.p.6
• Regulatory mechanisms such as sandboxes and moratoriums must balance curbing predatory lending with preserving digital credit access for underserved populations.p.7
• Comparative insights from jurisdictions like Singapore, Malaysia, Hong Kong, Kenya, and China offer regulatory reference points tailored to local institutional capacity.p.8

Key insights

1. Formal legal recognition of consumer rights is ineffective unless supported by practical enforcement against unauthorized digital lending operators.p.2
2. Personal data protection must be integrated directly into consumer protection frameworks rather than treated as a separate regulatory issue.p.5
3. Terminating illegal lending applications alone leaves victimized consumers without legal remedies for ongoing data governance and financial harms.p.6
4. A comprehensive enforcement response requires distinguishing the legal roles and responsibilities of borrowers, lenders, platform operators, and state authorities.p.7
5. Regulatory sandboxes and innovation hubs require explicit linkages to licensing, oversight, and consumer safeguards to prevent illegal operator expansion.p.7
6. Comparative legal analyses provide contextual questions for policy evaluation but cannot be directly copied due to institutional differences.p.8
7. Strengthening consumer safeguards requires aligning preventive supervision, rapid complaint-handling mechanisms, and victim-oriented remedies.p.9