▲ Illegal Private Financing
Police have declared a "war" to eradicate increasingly vicious illegal private lending crimes, deploying dedicated investigators and strengthening victim protection measures.
The National Office of Investigation under the Korean National Police Agency announced today (July 22) that it has drawn up comprehensive measures to eradicate illegal private lending crimes, focusing on cutting off criminal chains, systematic investigations, and customized preventive publicity.
Police have achieved results by conducting special crackdowns from November of last year through June of this year, arresting 2,060 individuals involved in illegal private financing, including 76 who were detained.
However, a more comprehensive response became necessary as illegal collection methods have grown increasingly vicious, such as the emergence of new schemes abusing gift certificate advance sales and "nude debt collection," where debtors are blackmailed using nude photos taken in advance when borrowing money.
Accordingly, the police will assign at least one dedicated investigator to 105 police stations nationwide that handled 20 or more illegal private financing cases annually. These officers will handle not only investigations but also victim counseling and the deletion and blocking of criminal means.
In addition, the authority to request the suspension of telephone numbers used for illegal debt collection will be expanded to the heads of police offices nationwide.
Previously, only the Commissioner General of the Korean National Police Agency could request suspension, but moving forward, the head of a police station where a case is filed will also be able to request it immediately, aiming to block illegal debt collection contacts more promptly.
The number of suspended telephone numbers used in illegal private lending crimes increased significantly from 18 cases in 2024 to 375 cases last year.
The police also plan to push for a system that enables the prompt freezing of accounts used in illegal private financing crimes.
They plan to review measures utilizing customer verification obligations under the Act on Reporting and Using Specified Financial Transaction Information through consultations with financial authorities.
According to police, illegal private lenders abuse contact information of family members and acquaintances as well as ID cards secured during the loan process, leading to secondary crimes such as illegal debt collection and the distribution of personal information.
Recently, so-called "shaming" collection tactics have emerged, where debtors' ID cards and photos are posted or distributed on social networking services (SNS).
In response, the police will establish guidelines containing procedures to request online service providers to delete and block such content to prevent the spread of damage.
Furthermore, the police will push for revisions to the Loan Business Act to allow "undercover investigations" for illegal private financing cases, and strengthen joint crackdowns with related agencies such as the Financial Supervisory Service and local government special judicial police.
In addition, the police plan to apply for pre-indictment confiscation and preservation of proceeds for all violations of the Loan Business Act, recovering criminal proceeds including excessive interest to fundamentally strip away illegal profits.
In addition, starting next month, the police will establish a one-stop support system linked with the Credit Counseling and Recovery Service application so that protection and support procedures are implemented immediately when victims apply for counseling.
They expect that improving the existing procedure, which required checking whether victims consented one by one, will enable more prompt support.
According to the Korean National Police Agency, the number of reported illegal private lending crimes surged by 305.2% over four years, from 1,362 cases in 2021 to 5,519 cases last year.
On the other hand, as the use of secure messengers, burner phones, and dummy accounts increased, the arrest rate dropped from 74.7% to 61.0% over the same period.
Victims were frequently daily wage workers and small business owners, and the proportion of young adults in their 20s and 30s entering society is also on the rise.
Recently, crimes targeting teenagers and foreign workers have also continued to occur.
Based on crime analysis results, the police plan to conduct customized publicity utilizing various media outlets reflecting victim characteristics by age and occupation.
Hong Seok-ki, head of the National Office of Investigation, said, "Illegal private lending crimes are exploitative financial crimes that mortgage not only the economic lives of ordinary citizens but also their futures," adding, "We will pursue them to the end so that no one can reap any profit whatsoever through illegal private financing crimes."
(Photo provided by the Seoul Metropolitan Police Agency Criminal Mobility Unit, Yonhap News)
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