Guide to Personal Banking and Finance Detail | 금융감독원 금융교육센터

Guide to Personal Banking and Finance

Guide to Personal Banking and Finance Detail
Ⅴ. Preventing Financial Fraud(2)
Posting date 2019-12-18 Hit 332
Ⅴ. Preventing Financial Fraud (2).pdf

 . Preventing Financial Fraud(2)



2. Illegal Private Finance

Illegal private banking refers to high interest rate loans, illegal debt collection, and loan frauds that are provided by private financial institutions other than officially registered financial institutions.


(1) Loan fraud

The scammers who present themselves as employees from well-known financial companies approach the victim for the reason of loan consultation or loan arrangement over the phone. The scammers request the victim to send money for adjustment of credit rating, loan commission, repayment of existing loan, etc., and they disappear after swindling the money transferred to the illegally obtained bank account.


        * Illegally obtained (borrowed-name) bank account: it refers to a bank account opened in the name of another person other than a person who use the bank account.


▼ More Information: Main Types of Loan Fraud

 ◇ Deposit of Guarantee Fee: A case where the scammers ask for a certain amount of money (10% of the loan) saying the victim should purchase guarantee insurance and issue a guarantee certificate to get loan due to the low credit rating.


 ◇ Arrangement of Low Interest Rate Loans: A case where the scammers demand the victim to deposit money for a certain period of time (3 months, etc.) to arrange low interest rate loans from official financial institutions such as banks.


 ◇ Upgrading the Credit Rating: A case that the scammers demand money because it requires data processing costs to delete credit information inquiry record or upgrade the credit rating.


 ◇ Prepayment of Interest: A case that the scammers demand money where the loan can be made only when the interest for a certain period is prepaid or the existing loan is paid back.


 ◇ Illegally obtained Bank Account: A case where the scammers request the victim to send a copy of bankbook, check card (including password), etc., saying that a deposit and withdrawal transaction must be made to receive an overdraft loan.


 ◇ Opening of Mobile Phone: Scammers deceive the victim that they will provide a loan if the victim opens a mobile phone account and send it as collateral. But the scammers use the phone as an ‘illegally obtained phone’ and make the victim pay a large communication fee.

  * Illegally obtained phone: it refers to a phone which is illegally opned in the name of other person in order to hide his/her own identity or to throw the police off.


▼ Tip!: Preventing Financial Fraud

    Loan fraudster may demand the victim sends a copy of a passbook and check card in exchange for a loan, but they just may use it to open an illegally obtained bank account.


   ⇒ In this case, the victim may be involved in civil and criminal proceedings because his/her bank account is used for illegal activities, so if he/she recognizes a loan fraud, he/ she should immediately contact the financial company to request the suspension of payment or cancellation of the account.


  ※ According to Article 6 of the Electronic Financial Transactions Act, act of transferring electronic financial transaction means such as check cards is prohibited. Violation of this may result in imprisonment with labor for up to three years, or by a fine of up to 20 million won.


(2) Illegal high interest rate

The statutory maximum interest rate applied to duly registered money lenders is 24% per year, and act of demanding interest rate exceeding such statutory maximum interest rate is prohibited by the laws. All moneys received by the money lender, including fee, overdue interest, etc. are regarded as interest. (However, the cost of the security right and the credit inquiry fee are excluded) If the amount including this exceeds the statutory interest rate, there is no obligation to repay the portion exceeding the statutory interest rate. If the money lender deducts the interest in advance, the interest rate will be calculated based on the amount actually paid (principal) to the debtor, excluding the deduction.



Tip!: How to calculate the interest on a loan

  ◇ If it is difficult to calculate the interest on loans, such as day-to-day loans, it can be easily calculated based on the daily interest calculator (interest calculator responding to illegal finance) on the Micro Finance 1332 web-site ( of the Financial Supervisory Service.


(3) Illegal debt collection

The collection of debts refers to requesting debtor to repay the debt when the debtor does not repay the debt that occurs in the course of financial transaction without justifiable reasons. [Fair Debt Collection Practices Act] specifies the matters that the collector should follow in the process of collecting debts. If this is not complied with, debt collection will involve criminal punishment or administrative measures. The main types of illegal debt collection include (1) acts of committing assault, threatening, arresting, or confining a debtor, or intimidating, (2) acts of paying visits to a debtor repeatedly or at nighttime (21:00~08:00) without any justifiable reason to arouse fear or apprehension, and (3) acts of demanding any person, other than a debtor, who does not owe any legal obligation to repay a debt on behalf of a debtor.


Tip!: 10 tips responding to illegal debt collection

(1) Check the identity of the debt collector.

(2) Check carefully whether the debt collection matches your debt.

(3) Check whether your debt is subject to collection.

(4) Parents are not obligated to repay debts of their children.

(5) The debt collection company cannot take legal measures such as seizure and auction.

(6) Refuse proposal of the debt collection company that they repay the debt.

(7) Deposit the payment into the creditor`s account.

(8) The debt settlement certificate shall be kept for more than 5 years.

(9) Record the debt collection process in detail.

(10) If there is any illegal debt collection act, report it to the Financial Supervisory Service or the police station without delay.


More Information: Type of Illegal Debt Collection

(1) Act of collecting debt without disclosing the identity of the debt collector

(2) Act of collecting invalid or non-existing debt

(3) Act of repeatedly calling or paying visits

(4) Act of calling or visiting at night (9 pm ~ 8 am)

(5) Act of informing third person such as related parties of the debt

(6) Act of requesting a third person such as related parties to repay the debt

(7) Act of threatening to arouse fear or apprehension

(8) Act of forcing to borrow the money to repay the debt

(9) Act of collecting debt from person under rehabilitation and bankruptcy procedure

(10) Act of falsely guiding the progress in the legal proceedings such as auction or seizure


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