Fraud Risk in Peer Lending Fintech Transactions: The Role of Consumer Protection Regulation in Indonesia

Ratih Pratiwi; Muchammad Shidqon Prabowo; Marno Nugroho; Windi Novia Ratri Wardhani

doi:10.23887/ijssb.v6i4.46511

Authors

Ratih Pratiwi Universitas Wahid Hasyim, Semarang, Indonesia https://orcid.org/0000-0003-4868-1776
Muchammad Shidqon Prabowo Universitas Wahid Hasyim, Semarang, Indonesia
Marno Nugroho Universitas Islam Sultan Agung, Semarang, Indonesia
Windi Novia Ratri Wardhani Universitas Wahid Hasyim, Semarang, Indonesia

DOI:

https://doi.org/10.23887/ijssb.v6i4.46511

Keywords:

Fintech Peer to Peer Lending, Consumer Protection, Fraud

Abstract

Fintech P2P Lending has caused many complaints from its consumers. This study discusses how consumer protection regulations can reduce fraud from the P2P Lending platform. This study uses a normative research method using a legal approach and a case approach. The population used in this study were P2P customers. This study analyzes the problem with a legislative concerning consumer protection and financial services authority regulation about information technology borrowing and borrowing services. Data collection used primary legal materials in the form of laws and secondary legal materials obtained from library studies in the form of literature. The researcher applies a qualitative data analysis method. The results of this study are one of the key factors in protecting consumer rights derived from various regulations related to the supervision and supervision system carried out by the government. The government should do more education and outreach to the public regarding the fintech peer to peer lending platform and the formation of the Investment Alert Task Force. The study and formulation of government regulations must be balanced with the speed of technological change and digital transformation by involving practitioners so as not to harm each other. Synergy between stakeholders (collaboration), law, surveillance, and data protection can reduce the risk of illegal P2P platform practices. Coordination and synergy between policy makers and stakeholders will greatly facilitate handling in regulating the P2P Lending platform so as not to cause overlapping regulations that cause new problems.

References

Anagnostopoulos, I. (2018). Fintech and regtech: Impact on regulators and banks. Journal of Economics and Business, 100, 7–25. https://doi.org/10.1016/j.jeconbus.2018.07.003. DOI: https://doi.org/10.1016/j.jeconbus.2018.07.003

Ashta, A., & Biot-Paquerot, G. (2018). FinTech evolution: Strategic value management issues in a fast changing industry. Strategic Change, 27(4), 301–311. https://doi.org/10.1002/jsc.2203. DOI: https://doi.org/10.1002/jsc.2203

Atikah, I. (2020). Consumer Protection and Fintech Companies in Indonesia: Innovations and Challenges of the Financial Services Authority. Jurnal Hukum Dan Peradilan, 9(1), 132. https://doi.org/10.25216/jhp.9.1.2020.132-153. DOI: https://doi.org/10.25216/jhp.9.1.2020.132-153

Broby, D. (2019). Strategic Fintech. Journal Centre for Financial Regulation and Innovation, 1–13. https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3404518.

Cai, C. W. (2018). Disruption of financial intermediation by FinTech: a review on crowdfunding and blockchain. Accounting and Finance, 58(4), 965–992. https://doi.org/10.1111/acfi.12405. DOI: https://doi.org/10.1111/acfi.12405

Caldeira, E., Brandao, G., & Pereira, A. C. M. (2014). Fraud analysis and prevention in e-commerce transactions. Proceedings - 9th Latin American Web Congress, LA-WEB 2014, 42–49. https://doi.org/10.1109/LAWeb.2014.23. DOI: https://doi.org/10.1109/LAWeb.2014.23

Chatterjee, A., & Sahoo, S. (2011). Consumer protection: Problems and prospects. Postmodern Openings. Postmodern Openings, 7(9), 157–182. https://papers.ssrn.com/sol3/Delivery.cfm?abstractid=1268545#page=157.

Chiu, I. H.-Y. (2016). The Disruptive Implications of Fintech-Policy Themes for Financial Regulators. SSRN Electronic Journal, 21(1), 1995. https://doi.org/10.2139/ssrn.2812667. DOI: https://doi.org/10.2139/ssrn.2812667

Glosten, L., & Rauterberg, G. (2018). Disrupting Finance FinTech and Strategy in the 21st Century. In The New Stock Market. https://doi.org/10.7312/fox-18196-006. DOI: https://doi.org/10.7312/fox-18196

Goldstein, I., Jiang, W., & Karolyi, G. A. (2019). To FinTech and beyond. Review of Financial Studies, 32(5), 1647–1661. https://doi.org/10.1093/rfs/hhz025. DOI: https://doi.org/10.1093/rfs/hhz025

Gomber, P., Kauffman, R. J., Parker, C., & Weber, B. W. (2018). On the fintech revolution: Interpreting the forces of innovation, disruption, and transformation in financial services. Journal of Management Information Systems, 35(1), 220–265. https://doi.org/10.1080/07421222.2018.1440766. DOI: https://doi.org/10.1080/07421222.2018.1440766

Hadi, F., Yuhandri, Y., & Mayola, L. (2021). Implementasi E-Commerce Untuk Memperluas Pangsa Pasar Hasil Kerajinan UMKM Komunitas Hobi Kayu Padang. JDISTIRA, 1(1), 25–33. http://download.garuda.kemdikbud.go.id/article.php?article=2808260&val=24939. DOI: https://doi.org/10.58794/jdt.v1i1.31

Hidayat, A. S., Alam, F. S., & Helmi, M. I. (2020). Consumer protection on peer to peer lending financial technology in Indonesia. International Journal of Scientific and Technology Research, 9(1), 4069–4072. https://www.researchgate.net/profile/Muhammad-Helmi-2/publication/343295267.

Jagtiani, J., & John, K. (2018). Fintech: The Impact on Consumers and Regulatory Responses. Journal of Economics and Business, 100, 1–6. https://doi.org/10.1016/j.jeconbus.2018.11.002. DOI: https://doi.org/10.1016/j.jeconbus.2018.11.002

Junaedi, D. (2020). Dampak Pandemi Covid-19 terhadap Pasar Modal di Indonesia: Studi Kasus Indeks Saham Komposit (IHSG). Al-Kharaj: Jurnal Ekonomi, Keuangan, Dan Bisnis Syariah, 2(2), 109–131. https://doi.org/10.47467/alkharaj.v2i2.112. DOI: https://doi.org/10.47467/alkharaj.v2i2.112

Kagan, J. (2020). Financial technology–fintech. Datum Pristupa Dokumentu, 13(6), 2020. https://www.cpaireland.ie/CPAIreland/media/Education-Training/Syllabus Articles.

Kartiwi, M., Hussin, H., Suhaimi, M. A., Mohamed Jalaldeen, M. R., & Amin, M. R. (2018). Impact of external factors on determining E-commerce benefits among SMEs in Malaysia. Journal of Global Entrepreneurship Research, 8(1), 1–12. https://doi.org/10.1186/s40497-018-0105-7. DOI: https://doi.org/10.1186/s40497-018-0105-7

Kurniawati, E., Idris, I., Al, I. H., & Shiddiq. (2020). E-Commerce Opportunities in The 4.0 Era Innovative Entrepreneurship Management Development. Polish Journal of Management Studies, 21(1), 199–210. https://doi.org/10.17512/pjms.2020.21.1.15. DOI: https://doi.org/10.17512/pjms.2020.21.1.15

Lee, I., & Shin, Y. J. (2018). Fintech: Ecosystem, business models, investment decisions, and challenges. Business Horizons, 61(1), 35–46. https://doi.org/10.1016/j.bushor.2017.09.003. DOI: https://doi.org/10.1016/j.bushor.2017.09.003

Manwaring, K. (2018). Will emerging information technologies outpace consumer protection law? — The case of digital consumer manipulation. Competition and Consumer Law Journal, 26(141), 141–181. https://doi.org/10.3724/SP.J.1042.2019.00406. DOI: https://doi.org/10.3724/SP.J.1042.2019.00406

Matnuh, H. (2021). Rectifying Consumer Protection Law and Establishing of a Consumer Court in Indonesia. Journal of Consumer Policy, 44(3), 483–495. https://doi.org/10.1007/s10603-021-09487-z. DOI: https://doi.org/10.1007/s10603-021-09487-z

Mention, A. L. (2019). The Future of Fintech. Research Technology Management. Research Technology Management, 62(4), 59–63. https://doi.org/10.1080/08956308.2019.1613123. DOI: https://doi.org/10.1080/08956308.2019.1613123

Nuryakin, C., Aisha, L., & Massie, N. W. G. (2019). Financial Technology in Indonesia: A Fragmented Instrument for Financial Inclusion? LPEM-FEB UI Working Paper, 36, 1–9. https://www.lpem.org/wp-content/uploads/2019/06.

Palinggi, S., & Allolinggi, L. R. (2020). Analisa Deskriptif Industri Fintech di Indonesia: Regulasi dan Keamanan Jaringan dalam Perspektif Teknologi Digital. Ekonomi Dan Bisnis, 6(2), 177. https://doi.org/10.35590/jeb.v6i2.1327. DOI: https://doi.org/10.35590/jeb.v6i2.1327

Palmié, M., Wincent, J., Parida, V., & Caglar, U. (2020). The evolution of the financial technology ecosystem: An introduction and agenda for future research on disruptive innovations in ecosystems. Technological Forecasting and Social Change, 151. https://doi.org/10.1016/j.techfore.2019.119779. DOI: https://doi.org/10.1016/j.techfore.2019.119779

Pavlou, P. A., Huigang, L., & Yajiong, X. (2007). Understanding and mitigating uncertainty in online exchange relationships: A principal-agent perspective. MIS Quarterly: Management Information Systems, 31(1), 105–135. https://doi.org/10.2307/25148783. DOI: https://doi.org/10.2307/25148783

Petraşcu, D., & Tieanu, A. (2014). The role of internal audit in fraud prevention and detection. Procedia Economics and Finance, 16, 489–497. https://doi.org/10.1016/S2212-5671(14)00829-6. DOI: https://doi.org/10.1016/S2212-5671(14)00829-6

Prawirasasra, K. P. (2018). Financial technology in Indonesia: disruptive or collaborative? Reports on Economics and Finance, 4(2), 83–90. https://doi.org/10.12988/ref.2018.818. DOI: https://doi.org/10.12988/ref.2018.818

Putra, M. W. P., & Kasmiarno, K. S. (2020). Pengaruh Covid-19 Terhadap Kehidupan Masyarakat Indonesia: Sektor Pendidikan, Ekonomi Dan Spiritual Keagamaan. POROS ONIM: Jurnal Sosial Keagamaan, 1(2), 144–159. http://e-journal.iainfmpapua.ac.id/index.php/porosonim/article/view/41. DOI: https://doi.org/10.53491/porosonim.v1i2.41

Raval, D. (2021). Who is Victimized by Fraud? Evidence from Consumer Protection Cases. Journal of Consumer Policy, 44(1), 43–72. https://doi.org/10.1007/s10603-020-09466-w. DOI: https://doi.org/10.1007/s10603-020-09466-w

Riyanto, A., Primiana, I., Yunizar, & Azis, Y. (2018). Disruptive Technology: The Phenomenon of FinTech towards Conventional Banking in Indonesia. IOP Conference Series: Materials Science and Engineering, 407(1). https://doi.org/10.1088/1757-899X/407/1/012104. DOI: https://doi.org/10.1088/1757-899X/407/1/012104

Roy, A. (2020). Rethinking Consumer Protection: Escaping Death by Regulation. Journal of International Consumer Marketing, 32(2), 159–161. https://doi.org/10.1080/08961530.2019.1711325. DOI: https://doi.org/10.1080/08961530.2019.1711325

Shashikala, K. (2019). Digital disruption in banking industry. International Journal of Social and Economic Research, 9(3), 56. https://doi.org/10.5958/2249-6270.2019.00019.9. DOI: https://doi.org/10.5958/2249-6270.2019.00019.9

Suryono, R. R., Budi, I., & Purwandari, B. (2021). Detection of fintech P2P lending issues in Indonesia. Heliyon, 7(4), e06782. https://doi.org/10.1016/j.heliyon.2021.e06782. DOI: https://doi.org/10.1016/j.heliyon.2021.e06782

Wopperer, W. (2002). Fraud Risks in E–commerce Transactions. The Geneva Papers on Risk and Insurance, 27(3), 383–394. http://web.a.ebscohost.com.ezproxy.library.qmul.ac.uk. DOI: https://doi.org/10.1111/1468-0440.00180

Yuanitasari, D., Judiasih, S. D., & Chairunissa, R. (2020). Consumer Protection Related To Dispensing Pump Manipulation in Spbu (Gas Station). Jurnal Pembaharuan Hukum, 7(2), 141. https://doi.org/10.26532/jph.v7i2.10855. DOI: https://doi.org/10.26532/jph.v7i2.10855

Yuniarti, S., & Rasyid, A. (2020). Consumer Protection in Lending Fintech Transaction in Indonesia: Opportunities and Challenges. Journal of Physics: Conference Series, 1477(5). https://doi.org/10.1088/1742-6596/1477/5/052016itle. DOI: https://doi.org/10.1088/1742-6596/1477/5/052016