"Borrow and Don't Have to Repay?"... Surge in Illegal SNS Loan Ads

"We help those who have run away from home or need regular pocket money."

This is a "private quick cash loan" advertisement posted on X on the 16th.

Illegal private financing is riding social media to spread its tentacles to college students, soldiers, and teenagers in their teens.

As online gambling, the stock investment craze fueled by FOMO (fear of missing out), and financial hardship intertwine, young people who have not even stepped foot into society yet are falling into the traps of illegal private financing.

Jeong Wan, Professor Emeritus at Kyung Hee University School of Law, pointed out, "The spread of illegal private financing through social media is a serious social problem that can destroy the economic and social foundation of the younger generation," adding, "In particular, young people lacking financial experience often fail to properly recognize the risks of contracts, making it very likely that the damage will be prolonged."

As of the 25th, illegal loan advertisements targeting teenagers and soldiers can easily be found on social media, such as "Minors born from 2010 onwards eligible for (loans). Living funds, gambling funds, entertainment funds all ok" (X), and "Where would minors or soldiers get money? They won't ask to repay, but give money? Curious, come in for a consultation" (Threads).

They attempt to build "trust" by posting captured images of actual money deposit histories and KakaoTalk message reviews from people who borrowed money.

When we conducted loan consultations via the Line app from the 16th to the 23rd, the consultants commonly demanded names, addresses, and contact information, along with workplace names, salary amounts and payday, existing loan and overdue history, and whether mobile phones were suspended.

Among them, a consultant from account A, which posted the phrase "Minors born in 2010 are also eligible for loans," explained, "If you borrow 200,000 won, you must repay 400,000 won a week later."

Then, they said, "Try borrowing just 100,000 won first," and even made the incomprehensible and absurd remark that "you don't have to pay back the money even if you borrow it."

When asked what that meant, the consultant, who called himself the "manager of the brokerage room (loan consultation chat room)," replied, "It means you don't need to be scared because there will absolutely be no harm like illegal collection even if you can't pay back the money."

When hesitation over taking out the loan continued anyway, they applied renewed pressure, stating, "If there are excessive inquiries (receiving loan consultations multiple times), there may be disadvantages to your limit or approval."

Also, when asked by account B, "I was born in 2009, is a loan possible?", an interest rate of 800,000 won for a 1 million won loan was proposed.

They also requested contact information of an acquaintance as collateral.

In response to the inquiry asking "Can a soldier get a loan?", the consultant of account C demanded an interest of 500,000 won for 1 million won, and account D demanded an interest of 1.80 million won on the condition of lending 2 million won for a week.

Both accounts C and D mandated identity verification via video call.

On the 21st, the Korea Loan Finance Association announced that as a result of the "Online Illegal Private Financing Advertising Status Inspection" conducted for two months starting in April, a total of 7,855 illegal advertisements from 280 suspected illegal private financing entities were detected.

This is an increase of 2,563 cases (+48%) compared to last year (5,292 cases), and the association stated that online illegal private financing advertisements are expanding.

Among all detected advertisements, 77.7% were social media advertisements (YouTube, Facebook, Instagram, etc.).

In addition, according to the Financial Services Commission last April, 86% of victims who visited the Credit Counseling and Recovery Service turned out to have used illegal private financing through online channels (social media, loan brokerage sites).

An official from the Financial Supervisory Service's Livelihood Infringement Response General Team stated, "In the past, illegal private financing was mainly carried out through phones and the like, but nowadays, with the development of social media, cases of uploading loan ads on social media or exchanging actual conversations and receiving funds deposits are increasing."

Lee Moon-yong, a lawyer at Law Firm Daeryun, warned, "Information on workplace names, paydays, and residential addresses is highly likely to be used later for illegal debt collection," adding, "Paydays can be used to set collection timings, workplace information for pressure via workplace visits or contacts, and family and acquaintance contact information for indirect pressure through third parties."

Posts related to "private quick cash loans" for soldiers and minors continue online.

On the 13th, on the Q&A platform Aha, a user who identified as a minor asked, "I urgently need about 100,000 won right now, are quick small loans on Twitter real? There are posts saying that personal money is possible even for minors, but I urgently need money and must earn it right away somehow. Is this okay?"

On June 4, on the legal consultation platform LawTalk, a user who identified as an active-duty soldier posted, "During the loan process, an acquaintance's contact information was passed on to lenders, and when repayment was delayed, the acquaintance received terror text messages."

The military is also taking the gambling and loan issues of enlisted soldiers seriously.

This is because as a private's salary exceeds 700,000 won and a sergeant's salary reaches 1.5 million won, soldiers engaging in online gambling and stock investment are increasingly falling into illegal loans as well.

Kim, 20, who enlisted as an active-duty soldier in the Army last January, said, "The military often provides financial education, emphasizing not to gamble and not to lend money to other soldiers," adding, "They say it's a problem because even though soldiers' salaries have increased, many end up with tens of millions of won in debt when they are discharged."

Under current law, the maximum interest rate for monetary loan contracts is 20% per annum.

However, the interest rates demanded by "private quick cash loan" consultants exceed 90 to 180 times the legal maximum interest rate.

According to an announcement by the Financial Services Commission last October, for two months immediately following the implementation of the revised Loan Business Act, illegal private financing damage reports and consultations totaled 3,652 cases, up 33.1% compared to the two months prior to implementation (2,744 cases).

Professor Emeritus Jeong pointed out, "Illegal private loans rapidly inflate principal through ultra-high interest rates and illegal fees, plunging victims into a vicious debt cycle called 'rollover debt'," adding, "Financial failures occurring in youth delay economic independence and entrench poverty, ultimately leading to social costs that exacerbate youth poverty and financial alienation."

Under the revised loan business regulations, illegal loan contracts exceeding 60% per annum can be rendered null and void for both principal and interest, while unregistered lending businesses are punishable by up to 10 years in prison, and violations of the maximum interest rate by up to 5 years in prison.

An official from the Financial Supervisory Service's Livelihood Infringement Response General Team explained, "If you capture social media ads, conversations, and deposit/withdrawal histories and report them, we determine whether it is illegal private financing and connect you to customized relief systems," adding, "A one-stop damage relief service supporting everything from issuing validity confirmation certificates to appointing debtor representatives at once is also currently in operation."

Professor Emeritus Jeong suggested, "As illegal private financing has evolved into social media and overseas messengers, responses must also be carried out comprehensively," and added, "Along with platforms blocking illegal advertisements, preemptive investigations by authorities, and strengthened financial education in schools, we must further expand the one-stop damage relief system connecting everything from reporting to stopping illegal debt collection."

(Photo: Capture of Threads and X usage screens, Yonhap News)
※ Please note: This article was translated by AI and may contain errors.