By Adinova Fauri , Centre for Strategic and International Studies (CSIS) Indonesia

Online fraud and scams have become a critical threat to Indonesia’s socio-economic situation. In total, frauds and scams inflicted an estimated US$ 275 million (Rp 4.6 Trillion) in economic losses in Indonesia. The number likely understates the real costs, due to significant underreporting and the broader indirect costs stemming from eroding trust in digital services. When users perceive digital platforms as unsafe, they are less willing to adopt and utilise digital platforms, which will also reduce the potential gain of digital platforms to the economy.

Indonesia’s exposure to online scams is shaped by several structural factors including rapid internet expansion, high smartphone penetration, and uneven digital literacy. Although the government has undertaken various initiatives, including awareness campaigns, regulatory measures, and the establishment of the Indonesia Anti-Scams Center (IASC) under the Financial Services Authority (OJK), the current institutional framework leaves some areas of improvement to fully address the scale and sophistication of emerging threats.

Key Challenges in Strengthening Regulatory and Institutional Response

There are two key regulatory and institutional challenges to create a better framework in addressing frauds and scams. First, is by improving data and internet governance framework. Weak data governance significantly increases individuals’ vulnerability to scams. Without robust oversight, scammers can easily misuse personal data to create more targeted scams. Indonesia has enacted a Personal Data Protection Law (PDP Law), but key implementing regulations and the mandated supervisory authority are not yet operational. As a result, the full potential of the PDP Law to support detection, prevention, and coordinated action across sectors remains unrealised.

In addition to that, some of the regulatory instruments necessary to equip Indonesia’s framework for creating better internet governance remain outdated. Indonesia’s core consumer protection law, enacted in 1999, does not fully cover disputes and liabilities arising in digital markets. Similarly, existing laws on illegal fund flows focus largely on account blocking, not the transactions itself. Existing regulations also do not provide mechanisms for recovery or enhanced supervision of digital transactions. These gaps hinder effective enforcement and limit Indonesia’s capacity to protect consumers.

The second one is related to the coordination problem. Effective scam prevention requires coordination across multiple government agencies, telecommunications regulators, digital platform authorities, law enforcement, and financial supervisors. The establishment of the IASC is an important step, but coordination challenges persist. These challenges include multiple reporting channels, overlapping mandates across ministries and regulators, and sectoral silos that slow response time and information sharing. In addition, coordination problems are also still underexplored across-borders. ASEAN has begun to recognise this challenge through the establishment of the ASEAN Working Group on Anti-Online Scams. However, regional mechanisms for cross-border intelligence sharing, joint operations, and harmonised policies remain limited. These coordination problems and institutional inefficiencies might undermine detection, enforcement, and victim support.

Here are four concrete priorities for policymakers.

1. Strengthen and operationalise data privacy protections

Robust data protection is central to preventing scams. While Indonesia now has a Personal Data Protection law on the books, key implementing regulations and an independent enforcement agency are still pending. Without clear rules for lawful data sharing, verification, and cross-sector cooperation, it is difficult for telcos, platforms, and banks to coordinate detection and prevention. Implementing regulations should enable secure, privacy-preserving data intelligence sharing between trusted stakeholders, allowing, for example, banks to flag suspicious accounts and digital platforms to block repeat offenders. It is also necessary to uphold strict safeguards for individuals’ privacy and data security. Without these mechanisms, stakeholders cannot reliably identify, track, or block scam-related accounts and activity more effectively.

2. Modernise outdated consumer protection law

Indonesia’s consumer protection framework provides a foundation, but much of it predates the digital era. The primary Consumer Protection Law, enacted in 1999, does not adequately cover online transactions. Although the government has consistently planned to introduce a new Consumer Protection Law, it has not yet been designated as a priority. The Indonesian government should update consumer protection law to explicitly cover digital transactions in the digital markets to create better legal clarity. Some level of transaction supervision is also necessary for better financial restitution mechanisms.

3. Create a single, user-friendly complaints and recovery platform

Fragmented reporting channels undermine victim support and become a continuing challenge for enforcement. Indonesians currently face multiple hotlines and portals, from the Ministry of Communication and Digital (cekrekening.id), National Consumer Protection Agency (BPKN 153), and OJK’s IASC, which may create a confusion for many to report. A unified national complaints portal for online fraud would centralise reports, speed triage, and improve data collection for enforcement and prevention. Paired with streamlined coordination protocols, a single portal would increase reporting rates, improve case outcomes, and provide better intelligence on scam patterns.

4. Deepen regional coordination and common standards

Frauds and scams frequently occur cross-border. ASEAN member states already recognise the need for a regional response by having the ASEAN Working Group on Anti-Online Scams (WG-SC), but action needs to cope with the threats. There is a need to deepen regional cooperation by creating a national anti-scams body to serve as a focal point for regional cooperation and mutual assistance; develop a common taxonomy for defining and classifying frauds and scams; build a platform for evidence sharing for better learning among policymakers and other stakeholders; and harmonise standards for internet and data governance especially to allow rapid data exchange that respect privacy principles.

The Need for Stronger Institutional Frameworks to Ensure a Safer Internet Ecosystem

The rapid escalation of fraud and scams has heightened the urgency for a stronger government response. Enhancing internet governance, along with deepening collaboration among stakeholders, both domestically and across borders, is becoming increasingly important to build a safer and more trusted digital ecosystem for all.