Legal Protection for Consumers of Sharia Fintech Lending (Pinjol Syariah) in Indonesia: A Regulatory and Ethical Review
Article Sidebar
-
Consumer Protection, Financial Technology, Sharia Fintech
Abstract
The rapid expansion of Sharia-compliant Financial Technology (Fintech) lending in Indonesia offers significant opportunities for financial inclusion. However, this growth has outpaced the development of a comprehensive regulatory framework, exposing consumers to considerable risks, including data privacy breaches, unclear contract terms, and unethical debt collection practices that may contravene Islamic principles. This study aims to critically analyze the adequacy of the current legal framework in providing protection for consumers of Sharia Fintech lending services in Indonesia, identifying key regulatory gaps and ethical inconsistencies. This research utilizes a normative juridical method. It involves a systematic analysis of primary legal sources, including laws and regulations from Indonesia’s Financial Services Authority (OJK), alongside secondary sources like academic literature and relevant case law. The analysis is further enriched by an ethical review based on foundational principles of Islamic law (Sharia). The findings reveal significant deficiencies in the existing legal infrastructure. While OJK regulations are in place, critical gaps persist concerning personal data protection, the transparency of digital contracts (akad), and effective dispute resolution mechanisms. Several prevalent industry practices, particularly in debt collection, were found to be misaligned with Sharia principles of justice (al-’adl) and the prohibition of harm (dharar). Legal protection for consumers in Indonesia’s Sharia Fintech lending sector is currently insufficient. Urgent regulatory reforms are necessary to strengthen data privacy laws, enforce transparent and fair contracts, and ensure that all operational practices strictly adhere to Sharia ethics to build a sustainable and trustworthy digital Islamic economy.
Full text article
References
Abd Wahab, N., Mohd Yusof, R., Zainuddin, Z., Shamsuddin, J. N., & Mohamad, S. F. N. (2023). Charting future growth for Islamic finance talents in Malaysia: a bibliometric analysis on the Islamic finance domains and future research gaps. Journal of Islamic Accounting and Business Research, 14(5), 812–837. https://doi.org/10.1108/JIABR-02-2022-0045
Abdurrahman, A. (2025). Extending the IBCDE Framework to Explore Barriers and Drivers in Indonesia’s Digital Economy. Journal of Digital Economy. https://doi.org/https://doi.org/10.1016/j.jdec.2025.08.003
Akbar, D. M., Kathryn, M., & Barra, L. (2023). The Influence of Business Ethics in Entrepreneurship in the Era of Covid-19 Pandemic. Sharia Oikonomia Law Journal, 1(4), 264–274. https://doi.org/10.55849/solj.v1i4.656
Ali, M., Raza, S. A., Khamis, B., Puah, C. H., & Amin, H. (2021). How perceived risk, benefit and trust determine user Fintech adoption: a new dimension for Islamic finance. Foresight, 23(4), 403–420. https://doi.org/https://doi.org/10.1108/FS-09-2020-0095
Alsaghir, M. (2023). Digital risks and Islamic FinTech: a road map to social justice and financial inclusion. Journal of Islamic Accounting and Business Research. https://doi.org/10.1108/JIABR-10-2022-0262
Alshater, M. M., Saba, I., Supriani, I., & Rabbani, M. R. (2022). Fintech in islamic finance literature: A review. Heliyon, 8(9), e10385. https://doi.org/https://doi.org/10.1016/j.heliyon.2022.e10385
Amlia, N., Tanaka, K., & Sato, H. (2025). Shariah-Compliant Investment Funds?: A Study on Investor Preferences and Portfolio Management in Indonesia. 3(2), 139–151.
Asyiqin, I. Z., Mareto, I., & Beltrán Genovés, M. (2024). The Role of Regulation in the Development of Sharia Fintech: A Review of Contemporary Islamic Economic Law. Sharia Oikonomia Law Journal, 2(4), 255–270. https://doi.org/10.70177/solj.v2i4.1241
Bakhouche, A., El Ghak, T., & Alshiab, M. (2022). Does Islamicity matter for the stability of Islamic banks in dual banking systems? Heliyon, 8(4), e09245. https://doi.org/https://doi.org/10.1016/j.heliyon.2022.e09245
Berger, A. N., Karakaplan, M. U., & Roman, R. A. (2024). Chapter 16 - Continuations vs scale backs of COVID-19 crisis policies in the crisis aftermath (A. N. Berger, M. U. Karakaplan, & R. A. B. T.-T. E. and F. I. of the C.-19 C. A. the W. Roman (eds.); pp. 275–305). Academic Press. https://doi.org/https://doi.org/10.1016/B978-0-443-19162-6.00016-5
Bin-Nashwan, S. A., Hussain Shah, M. H., Abdul-Jabbar, H., & Al-Ttaffi, L. H. A. (2023). Social-related factors in integrated UTAUT model for ZakaTech acceptance during the COVID-19 crisis. Journal of Islamic Accounting and Business Research, 14(8), 1383–1403. https://doi.org/10.1108/JIABR-02-2022-0038
Chiara, A., Marina, F., & Gioia, V. (2023). Analysis of Human Resource Recruitment in an Islamic Perspective. 1(March), 61–69.
Chiara, C., Diego, V., & Mara, S. (2023). Human Resource Management ( Human Resource Planning ). 1(March), 49–60.
Dewi, G., Erdogan, A., & Al-Momani, A. (2025). Shariah-Compliant Venture Capital: Exploring Financing Models for Startups in Indonesia. Sharia Oikonomia Law Journal, 3(2), 191–203. https://doi.org/10.70177/solj.v3i2.2089
Eshun, S. F., & Ko?enda, E. (2025). Determinants of financial inclusion in sub-Saharan Africa and OECD countries. Borsa Istanbul Review, 25(1), 34–56. https://doi.org/https://doi.org/10.1016/j.bir.2024.11.004
Fauzi, M., Guilin, X., & Jiao, D. (2023). Literature Review?: Unemployment Crisis , Maintaining the Dignity and Welfare of the People. 1(June), 115–125.
Ghaemi Asl, M., Ben Jabeur, S., Hosseini, S. S., & Tajmir Riahi, H. (2024). Fintech’s impact on conventional and Islamic sustainable equities: Short- and long-term contributions of the digital financial ecosystem. Global Finance Journal, 62, 101022. https://doi.org/https://doi.org/10.1016/j.gfj.2024.101022
Hamzah, M. I., Othman, A. K., Fikry, A., Putit, L., & Abu Hassan, L. F. (2025). The psychology of the afterlife and Islamic financing adoption. International Journal of Bank Marketing, 43(8), 1732–1755. https://doi.org/https://doi.org/10.1108/IJBM-11-2024-0696
Hassan, S., Dhali, M., Mehar, S. M., & Zaman, F. (2022). Islamic Securitization as a Yardstick for Investment in Islamic Capital Markets. International Journal of Service Science, Management, Engineering, and Technology, 13(1). https://doi.org/https://doi.org/10.4018/IJSSMET.315592
Hidajat, T. (2020). Unethical practices peer-to-peer lending in Indonesia. Journal of Financial Crime, 27(1), 274–282. https://doi.org/https://doi.org/10.1108/JFC-02-2019-0028
Jannat, S. (2025). Crowdfunding dilemmas: understanding the roadblocks in Bangladesh’s SME’s financial landscape. International Journal of Innovation Science, 17(4), 840–857. https://doi.org/https://doi.org/10.1108/IJIS-03-2024-0066
Kamal Basir, M. Z., Md Sham, F., Tan Abdullah, N. A. M., Sulaiman, M. N., Jafri, F., Ali, A. S., & Wondi, M. H. (2025). Exploring the role of digital da’wah in promoting green initiatives: A mini review. Sustainable Futures, 10, 101099. https://doi.org/https://doi.org/10.1016/j.sftr.2025.101099
Khan, Z., Naz, F., Ahmad, M. I., & Battisti, E. (2024). Income-driven fintech adoption and its impact on innovation: evidence from China. Business Process Management Journal, 31(5), 1862–1883. https://doi.org/https://doi.org/10.1108/BPMJ-08-2024-0678
Kholidah, H., Hijriah, H. Y., Mawardi, I., Huda, N., Herianingrum, S., & Alkausar, B. (2022). A Bibliometric mapping of peer-to-peer lending research based on economic and business perspective. Heliyon, 8(11), e11512. https://doi.org/https://doi.org/10.1016/j.heliyon.2022.e11512
Kok, S. K., Akwei, C., Giorgioni, G., & Farquhar, S. (2022). On the regulation of the intersection between religion and the provision of financial services: Conversations with market actors within the global Islamic financial services sector. Research in International Business and Finance, 59, 101552. https://doi.org/https://doi.org/10.1016/j.ribaf.2021.101552
Marszk, A., & Lechman, E. (2023). Chapter 2 - Exchange-traded funds: background and concepts (A. Marszk & E. B. T.-S. I. Lechman (eds.); pp. 11–54). Academic Press. https://doi.org/https://doi.org/10.1016/B978-0-12-823871-4.00004-0
Mawardi, I., Al Mustofa, M. U., Widiastuti, T., & Ghozali, M. (2024). The influence of institutional quality, economic freedom, and technological development on Islamic financial development in OIC countries. Journal of Open Innovation: Technology, Market, and Complexity, 10(2), 100279. https://doi.org/https://doi.org/10.1016/j.joitmc.2024.100279
Mertzanis, C., Hamill, P. A., Pavlopoulos, A., & Houcine, A. (2024). Sustainable investment conditions and corporate cash holdings in the MENA region: Market preparedness and Shari’ah-compliant funds. International Review of Economics & Finance, 93, 1043–1063. https://doi.org/https://doi.org/10.1016/j.iref.2024.05.005
Mohd Haridan, N., Hassan, A. F., Shah, S., & Mustafa, H. (2023). Financial innovation in Islamic banks: evidence on the interaction between Shariah board and FinTech. Journal of Islamic Accounting and Business Research, 14(6), 911–930. https://doi.org/10.1108/JIABR-11-2022-0305
Nagimova, A. Z. (2023). Islamic finance in Kazakhstan: the view of experts. Journal of Islamic Accounting and Business Research, 14(8), 1195–1215. https://doi.org/10.1108/JIABR-09-2021-0265
Putri, G. A., Widagdo, A. K., & Setiawan, D. (2023). Analysis of financial technology acceptance of peer to peer lending (P2P lending) using extended technology acceptance model (TAM). Journal of Open Innovation: Technology, Market, and Complexity, 9(1), 100027. https://doi.org/https://doi.org/10.1016/j.joitmc.2023.100027
Rabhan, B. S., & Almezeini, N. (2025). Fin-Tech Application in Saudi Arabia: Journal of Electronic Commerce in Organizations, 23(1). https://doi.org/https://doi.org/10.4018/JECO.383602
Rahma, S. A., Nur, S. M., & Anggraini, D. D. (2023). The Role of Corporate Governance and Financial Performance on the Value of ISSI Indexed Food and Beverage Companies in Indonesia. 1(June), 88–103.
Ryandono, M. N. H., Widiastuti, T., Filianti, D., Robani, A., Al Mustofa, M. U., Susilowati, F. D., Wijayanti, I., Dewi, E. P., & Atiya, N. (2025). Overcoming barriers to optimizing cash waqf linked sukuk: A DEMATEL-ANP approach. Social Sciences & Humanities Open, 11, 101588. https://doi.org/https://doi.org/10.1016/j.ssaho.2025.101588
Seidl, A., Cumming, T., Arlaud, M., Crossett, C., & van den Heuvel, O. (2024). Investing in the wealth of nature through biodiversity and ecosystem service finance solutions. Ecosystem Services, 66, 101601. https://doi.org/https://doi.org/10.1016/j.ecoser.2024.101601
Setyawati, C. E. N., & Pranindita, N. (2025). Chapter 11 - A progress of renewable energy transition finance in ASEAN (S. Hyun, F. Taghizadeh-Hesary, I. Lee, & B. B. T.-T. R. of G. and T. F. in A. C. N. and S. E. Xu (eds.); pp. 259–300). Elsevier. https://doi.org/https://doi.org/10.1016/B978-0-443-24736-1.00011-6
Suryono, R. R., Budi, I., & Purwandari, B. (2021). Detection of fintech P2P lending issues in Indonesia. Heliyon, 7(4), e06782. https://doi.org/https://doi.org/10.1016/j.heliyon.2021.e06782
Tanchangya, T., Tafsirun, U., Islam, M. S., Islam, N., Chakma, J., & Esquivias, M. A. (2025). Role of financial technology in small-scale natural Resource management through sustainable financing in Venezuela. Social Sciences & Humanities Open, 11, 101636. https://doi.org/https://doi.org/10.1016/j.ssaho.2025.101636
Yudaruddin, R. (2023). Financial technology and performance in Islamic and conventional banks. Journal of Islamic Accounting and Business Research, 14(1), 100–116. https://doi.org/10.1108/JIABR-03-2022-0070
Yuli, S. B. C., & Rofik, M. (2023). Unleashing open innovation: A decomposition nexus of Sharia-compliant financing and job creation. Journal of Open Innovation: Technology, Market, and Complexity, 9(4), 100162. https://doi.org/https://doi.org/10.1016/j.joitmc.2023.100162
Authors
Copyright (c) 2025 Emmi Rahmiwita Nasution, Michael Turner, Elvis Ewane, Emmi Rahmiwita Nasution
This work is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.
