CONSUMER JUSTICE IN DIGITAL LENDING: PRICING, COLLECTION PRACTICES AND THE PROHIBITION OF RIBĀ

Abstract

Digital lending has extended credit to millions of Indonesians previously excluded from formal finance, while generating harms concentrated among low-income borrowers through compounding charges, aggressive collection and the unlicensed sector operating beyond regulatory reach. This study aims to analyse where consumer protection fails in digital lending, to assess pricing and collection practices against both consumer law standards and the Islamic prohibition of ribā, and to formulate criteria for a protective regulatory design. The research applies normative juridical research with statutory, conceptual, case and comparative approaches, supported by a reading of the prohibition of increase for deferral and of exploiting necessity, drawing on Indonesian consumer protection, financial sector and data protection legislation, regulator instruments, and comparative interest ceiling regimes. The findings show that protection is organised around disclosure and licensing rather than around substantive limits, that the effective cost of short-tenor credit remains extreme when annualised despite daily rate caps, that collection harms operate through contact data harvested at application, and that enforcement against unlicensed lenders is displacement rather than suppression. Islamic doctrine treats the increase demanded for deferral as prohibited regardless of consent, which supplies a substantive rather than procedural standard. The study recommends total cost caps, statutory collection conduct rules, contact permission limits and affordability assessment.