In today’s digital era, easy access to technology enables various financial activities, including online borrowing. Online loans (fintech lending) represent a form of digital financial innovation that offers fast, practical, and accessible credit services. However, behind this convenience, there are significant risks such as debt traps, illegal lending practices, misuse of personal data, high interest rates, and aggressive debt collection methods.

The rapid growth of fintech lending, especially among Generation Z and university students, is influenced by a lifestyle that prioritizes practicality and instant access. This study aims to analyze the effectiveness of legal policy in regulating fintech lending in Indonesia in providing legal protection against illegal practices and debt traps.

This research employs a normative juridical method using statutory and conceptual approaches. The findings indicate that existing regulations, including Financial Services Authority Regulation Number 10/POJK.05/2022 and laws related to consumer and personal data protection, have not been fully effective in addressing the rapid growth of illegal fintech lending. Weak supervision, low financial literacy, and the imbalance between consumers and fintech providers contribute to inadequate legal protection.

Furthermore, easy digital access, non-face-to-face processes, and rapid loan disbursement encourage impulsive borrowing behavior among Generation Z. Therefore, more adaptive and responsive legal policies are required to balance technological innovation with effective consumer protection.