Anita Carolina, a 29-year-old resident of the East Java city of Surabaya, learned the hard way not to easily trust financial influencers on social media to make investment decisions.
She is struggling to reclaim IDR 471 million or approximately USD 28,200, a large chunk of savings that she had invested in peer-to-peer (P2P) lending platform Akseleran about three years ago, after seeing it promoted by an online influencer.
Akseleran is facing a lawsuit from at least 19 people who have accused it of causing them around IDR 6 billion (USD 359,410) in losses. The company attributed its financial problems to some borrowers defaulting on loan payments.
The whole ordeal made Carolina wary about following advice from online financial influencers, also known as “finfluencers.” She still invests in mutual funds and bitcoin, but now rigorously does her own research before investing.
“It’s disappointing, as I followed their advice, but now I avoid them entirely,” Carolina told Nikkei Asia. “Investing should not be marketed as a casual game. Influencers are salespeople, not financial advisers.”
An appetite for investment has been rising rapidly in Indonesia especially since the Covid-19 pandemic, led by younger people and buoyed by proliferating digital platforms allowing users to invest with just one click. The number of investors registered with capital markets has soared from 2.5 million in 2019 to 19.2 million as of October, 99.7% of whom are individuals, according to the Indonesia Central Securities Depository.
But many newcomers in the investment landscape lack knowledge and tend toward attaining high yields and quick gains, prompting them to search for tips online and fueling the popularity of local finfluencers who advise on investment options ranging from stocks to cryptocurrencies to P2P lending.
However, with cases of investments gone wrong and alleged scams piling up, Indonesia’s Financial Services Authority (OJK) is finally moving to regulate such influencers, many of whom are believed to lack proper financial training and conceal paid partnerships.
A new OJK rule took effect as of December 11, requiring all securities firms and brokers to vet, supervise, and assume legal responsibility for promotional content made by influencers they hire. Influencers analyzing securities must be licensed as investment advisers, and those doing promotional content must be registered as marketing partners. Influencers will be required to disclose paid endorsements and present the risks and rewards for any investment.
“The next time a piece of financial advice blows up on your feed, take a pause,” the OJK said in a social media campaign in October. “Just because it’s viral doesn’t mean it’s sound.”
“Before you make a move based on a finfluencer’s suggestion, do a quick background check,” it added, advising people to seek guidance from certified financial planners instead.
Akseleran is among several P2P lending platforms that have attracted public scrutiny in recent months after they defaulted on payments to lenders. Others include KoinP2P, Crowde, and Dana Syariah Indonesia. In November, OJK said it revoked Crowde’s license, and worked with police to investigate possible crimes by some others, too.
They are the latest P2P lending startups that have gone bust over the past two years in Indonesia, following the industry’s boom in the previous years as companies sought profits from funneling loans to the large unbanked and underbanked population in Southeast Asia’s biggest economy.
The platforms connect individual lenders with borrowers, usually small businesses having difficulties securing bank loans. Many of the lenders are young Millennials and Gen Z users introduced to schemes by finfluencers.
But P2P lending is not the only segment that investors have fallen victim to. Over the past few years, tens of thousands have suffered trillions of IDR in losses after investing in schemes like robot trading and binary options. Influencers who promoted them, such as Indra Kesuma and Doni Salmanan, have been jailed for fraud and money laundering.
The OJK has faced criticism for failing to protect investors. Its previous focus on shutting down websites and mobile apps connected to illegally operated financial technology businesses has been deemed insufficient, as new ones keep popping up.
Friderica Widyasari Dewi, OJK’s chief executive for financial industry oversight and consumer protection, said it had shut down or blocked a total of 13,229 illegal financial entities from 2017 to September. More than 80% of them offered online loans, followed by investment and pawnshop platforms.
The Ministry of Communications and Digital Affairs is also considering whether to regulate finfluencers more formally.
“We need to regulate, but we shouldn’t become too restrictive,” Bonifasius Wahyu Pudjianto, the head of the ministry’s human resources development agency, said in November. “Competency is necessary so that we don’t have individuals creating inaccurate content.”
Felicia Putri Tjiasaka, a finfluencer with one of the largest social media followings in Indonesia, admitted to having made mistakes with her past suggestions to invest in P2P lending. She said she herself had invested in Akseleran beginning in 2020 but stopped in 2023, adding that her financial predictions could be flawed.
“In Indonesia, it’s the productive P2P sector that is failing,” Tjiasaka told her 1.4 million followers on TikTok in June. “There are many factors, from the economy to internal company issues where credit analysis wasn’t strict enough.”
Tjiasaka had been an equity research analyst for nearly four years before becoming a content creator in 2020, according to her LinkedIn profile.
Tjiasaka’s management and Akseleran did not respond to Nikkei‘s requests for comment. A representative of KoinP2P’s customer service said it was only allowed to provide information to its platform’s users.
Experts cited that it was the “fear of missing out,” amplified by constant social media exposure, that drove many novice investors to fraudulent schemes.
A 2023 survey by the Center of Economic and Law Studies (CELIOS), a think tank in Jakarta, found that 70% of respondents trust finfluencers, on par with 69.5% for licensed financial consultants.
Finfluencers tend to be very persuasive with their relatable storytelling, accessible explanations, and ability to make investing feel less intimidating. Some also flaunted their wealth and financial gains they connected with certain investments, luring others to follow suit.
However, “it has become easy for individuals to label themselves as finfluencers without a proper background,” said Tauhid Ahmad, a senior analyst at the Institute for Development of Economics and Finance in Jakarta.
They often have limited understanding of risks and often fail to disclose promotional content, he added.
Rita Efendy, a certified technical analyst with over 20 years’ experience in capital markets, similarly said that many finfluencers “lack the proper financial education or understanding” to give advice.
She threw her weight behind the OJK move, including the mandate to declare paid promotions, as some influencers receive hefty payments from companies.
“You see influencers claiming to work for multiple brokerages, which is illegal, and anyone who knows the rules wouldn’t dare do that,” said Efendy, who is also the founder of Indonesia Investment Education, an education center.
She added that since the requirement for an investment adviser license is “complicated,” it might be better for the OJK to create a so-called whitelist of securities broker representative licensees instead.
Bhima Yudhistira Adhinegara, the executive director of CELIOS, said oversight is indeed urgently needed over finfluencers as they frequently blur the line between education and paid promotion.
“People are swayed by influencers with vested interests, not by reading financial reports or analyzing a company’s fundamentals,” Adhinegara said. “Meanwhile, those who really teach how to read financial reports simply can’t deliver the information as engagingly.”
Vanessa Michelle Chandra, cofounder of CoinKami, a Jakarta-based media outlet focusing on cryptocurrency and financial news, taught herself about cryptocurrencies and started investing in them during the pandemic.
She now has about 60,000 followers on Instagram, adding that despite her background in graphic design, her team includes a certified analyst. She asserted that certification is necessary for people making financial recommendations.
“I myself never branded myself as an influencer,” Chandra told Nikkei. “I just shared my own experience from the crypto industry, and after a while, a lot of people followed me.”
Roy Shakti, who has a total of around 600,000 followers on Instagram and YouTube, said he supports the OJK’s move.
“Naturally, professionals in the market have a different understanding of financial instruments than those who have only studied the theory,” said Shakti, who is also the founder of Ritz Academy, an event organizer for financial and business education based in East Java.
“But the real danger lies in the sheer number of people now positioning themselves as experts to teach trading, often without the necessary experience,” Shakti added. “While there’s a place for entrepreneurs sharing their success stories, anyone educating the public on stocks must be licensed.”
He added that he supports a regulatory model like in China, which “directly bans influencers from ‘flexing their wealth.'”
“You won’t find me promising easy money,” Shakti said. “Instead, I teach people how to raise funding and avoid scams.”
This article first appeared on Nikkei Asia. It has been republished here as part of 36Kr’s ongoing partnership with Nikkei.