Religious Branding and Consumer Harm in Indonesia’s Illegal Sharia-Labeled Online Lending

Abstract

Shocking Line: When illegal lenders borrow the language of Sharia, religious trust may become a vehicle for financial deception rather than consumer protection. Purpose of the study: This study examines the operating characteristics of illegal online lending schemes presented as Sharia-compliant, evaluates their conformity with Islamic economic law, and analyzes the legal protection potentially available to affected consumers under Indonesia’s financial, consumer, and personal data protection frameworks. Methods: Using qualitative doctrinal legal research supplemented by secondary enforcement evidence, the study analyzes legislation, DSN-MUI Fatwa No. 117/2018, international scholarship, and official Indonesian regulatory reports from 2024–2026 through statutory, conceptual, and documentary approaches and qualitative content analysis. Findings and discussion: The analysis identifies risks involving unauthorized operations, unclear contracts, undisclosed charges, intrusive data practices, and coercive collection. Sharia terminology alone cannot establish contractual legitimacy or compliance with prohibitions of ribā, gharar, and ẓulm. Although multiple legal remedies exist, their application requires differentiated assessments. Official enforcement statistics do not separately quantify Sharia-label misuse. Implication and Contribution: The study proposes a three-dimensional framework integrating representational legitimacy, substantive Sharia compliance, and regulatory accountability. It contributes a clearer legal understanding of potentially misleading religious claims and highlights the need for verifiable Sharia representations, coordinated consumer protection, and improved regulatory classification. Future research should examine actual contracts and borrower experiences. Keywords: Consumer Protection; Illegal Online Lending; Islamic Economic Law; Regulatory Accountability; Sharia Label Misuse.