Indonesian financial authority warns against risks of online loans for concert tickets amid rising fintech usage

Indonesian financial authority warns against risks of online loans for concert tickets amid rising fintech usage

INDONESIA — In a recent statement, the Financial Services Authority (Otoritas Jasa Keuangan or OJK) has advised the public to exercise caution when selecting financial technology (fintech) lending or online loan (pinjol) services that offer loan promotions for concert ticket purchases.

The warning comes in response to the increasing number of advertisements by pinjol providers offering loans specifically for buying concert tickets.

When interviewed after the Indonesia Sharia Financial Olympiad (ISFO) event on Monday, May 22, Friderica Widyasari Dewi, the Executive Head of Financial Services Authority for Behavior Supervision of Financial Services Providers, Consumer Education, and Protection at OJK, stated that there had been numerous advertisements for online loans promoting the purchase of concert tickets.

This statement was confirmed by Mahendra Siregar, the Chairman of the Board of Commissioners of the Financial Services Authority (OJK), who mentioned an increase in the demand for online loans prior to the sale of Coldplay tickets at the Gelora Bung Karno Main Stadium in Jakarta on 15 November this year.

Despite the relatively high-ticket prices ranging from Rp800,000 to 11 million rupiahs (US$730), depending on the seating and view, ardent fans of the British rock band showed extraordinary enthusiasm. Their motto is, “Money can be earned, but when else can we watch a Coldplay concert if not now?” even though ticket sales were conducted during a financially challenging month.

Consequently, online loan services have become a viable option for many, despite the high-interest rates. They are willing to bear the high fees associated with online loans because they believe it is worth it for the happiness and experience they will gain.

To address this situation, the Financial Services Authority (OJK) took to their official Instagram account to remind the public to avoid falling into the trap of illegal pinjol companies.

They listed several characteristics of illegal pinjol providers to be wary of, including easy requirements with only an ID card as collateral, unclear owner and office addresses, offers made through SMS or WhatsApp, ambiguous interest rates and penalties, lack of complaint services, requests for access to personal data, and absence of OJK permits.

However, some members of the public still believe that both illegal and legal pinjol services treat customers similarly, making it difficult to distinguish between the two.

Devie Rahmawati, a Social Observer from the University of Indonesia, shed light on various factors driving people to go to extreme lengths to obtain Coldplay concert tickets.

She explained that in this digital era, there are different social typologies, such as the experience economy and attention economy.

The younger generations, including Gen Y, Z, and now Alpha, prioritize experiences over ownership and actively seek various experiences. The digital world serves as a platform to showcase oneself, making experiences a crucial element.

According to Devie, in the attention economy era, everyone strives to garner attention and be seen as existing.

She emphasized that ownership alone cannot make a person authentic or gain attention as a means to achieve recognition.

However, experiences, which not everyone can have, can be displayed and thus become valuable. The rare experience of attending a Coldplay concert is driven by the fear of missing out (FOMO) that is currently infecting the digital community. Devie further noted that music is an inseparable part of the younger generation, especially in the digital realm.

Furthermore, Devie pointed out that digital creatures are the most stressed individuals. As a result, one way to relieve stress is through music.

The ticket frenzy and the phenomenon of easily resorting to online loan services occur due to the combination of various factors, including the experience economy, attention economy, FOMO, and catharsis as a means of releasing stress.

Devie also stated that this phenomenon is closely related to capitalism, an economic system that allows everyone the freedom to engage in economic activities for profit.

She believes that individuals who dare to apply for online loans for something they consider will bring them happiness should not be entirely prohibited. However, they must possess financial literacy and the ability to repay their debt.

If acquiring a loan brings them happiness and enhances their enthusiasm for work, making them more productive and enabling them to repay their debts, it should not be a problem.

However, when such decisions are made without careful consideration and sound financial knowledge, it can lead to disaster.

Other financial experts have voiced their concerns. Ahmad Gozali, a Financial Planner from Zelts Consulting, emphasized that taking on high-interest debt, such as online loans, solely to purchase concert tickets, is a risky financial decision.

“Taking on high-interest debt, such as online loans, is a definite red flag,” warned Ahmad in a WhatsApp interview with Liputan6.

Rahma Maryama, an independent financial planner, also cautioned against incurring debt for consumptive purposes like concert tickets.

She suggested that loans or borrowing should be avoided unless they are used for productive activities. Rahma further outlined specific conditions for borrowing, including having a realistic understanding of one’s financial situation, having a stable income to repay the loan, and being able to arrange for prompt repayment.

Moreover, Rahma stressed the importance of not settling one debt by acquiring new loans, commonly known as a cycle of debt. This cycle can lead to further financial distress and should be avoided.

The convenience and speed of obtaining funds through online loan services have tempted many individuals without thoroughly examining the credibility and status of the service providers.

Rahma emphasized the need for online loan providers to be under the supervision of regulatory authorities.

She warned against being lured by features or facilities that seem too good to be true. Every loan product comes with its own risks that should be carefully considered.

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