Government Takes Strong Measures Against Voice Phishing... Nationwide Crackdown and Strengthened Financial Institution Responsibilities by Year-End

[Asia Economy Reporter Kim Hyo-jin] "Starting today, OO Bank will approve additional loan limits on the same day for the entire population as the government begins executing emergency disaster relief loans for small business owners. You currently have a low credit rating, but if you borrow 20 million KRW and repay it to improve your credit, you may be eligible for larger loans."

Mr. A, a self-employed person struggling with financial difficulties due to the novel coronavirus disease (COVID-19) impact, recently received such a phone call. Due to existing loans and delinquency history, Mr. A found it difficult to obtain loans from formal financial institutions. Deceived by the mention of a well-known commercial bank and the phrase "credit improvement," he hurriedly procured 20 million KRW from private lenders and transferred it to the account provided.

Because of the urgent situation, he did not even consider whether the government’s emergency disaster relief fund was in the form of a loan. It turned out that the person advertising the loan was a voice phishing scammer. Mr. A ultimately lost the entire 20 million KRW and additionally bore a huge interest burden.

The government has launched an all-out campaign to eradicate voice phishing (telecommunication financial fraud) that devastates the lives of ordinary citizens. This was announced on the 24th through the "Comprehensive Plan to Eradicate Voice Phishing," jointly prepared by related agencies including the Financial Services Commission, Ministry of Science and ICT, and the National Police Agency.

The government will first conduct a nationwide intensive crackdown on illegal financial activities such as voice phishing by related agencies until the end of this year. At the same time, it plans to focus inspections on mass text message dispatch agencies and some telecommunications companies leasing facilities that could be exploited for financial fraud.

Furthermore, supervision of "dapo-phones," a major tool of voice phishing, will be significantly strengthened. This includes regularly clearing unused lines of expired prepaid phones, deceased persons, foreigners who have left the country, and closed corporations, as well as shortening the clearing cycle.

In addition, the government will greatly increase the installation of "whitelists (tampering blocking lists)" for major phone numbers of public and financial institutions, and enable suspension of the use of such phone numbers within two days after a voice phishing damage report. Currently, it usually takes 4 to 5 days, and up to 15 days at the longest.

Eun Sung-soo, Chairman of the Financial Services Commission (fourth from the left), and Choi Ki-young, Minister of Science and ICT (third from the left), are listening to an official's explanation at the voice phishing prevention service demonstration event held on the 24th at the Shinhan Bank headquarters in Jung-gu, Seoul. Photo by Moon Ho-nam munonam@

Along with this, the government plans to strengthen research and development (R&D) using big data and artificial intelligence (AI) to effectively respond to new voice phishing methods. In this regard, Financial Services Commission Chairman Eun Sung-soo and Minister of Science and ICT Choi Ki-young attended a voice phishing prevention service demonstration event held at Shinhan Bank’s headquarters in Jung-gu, Seoul, on the morning of the same day.

Shinhan Bank showcased voice phishing prevention technology that suspends the use of mobile banking apps if malicious apps or remote control apps are installed, while WhoWho & Company demonstrated technology that directly compares the voice of a call with a voice phishing criminal’s voice database (DB) to detect risk levels.

The government plans to integrate information from telecommunications companies and the financial sector and promote the advancement of prevention technologies by applying machine learning techniques to the "voice context" of voice phishing.

The government also plans to legislate the establishment of "Fraud Detection Systems (FDS)" by financial companies. Currently, there is no separate legal system regarding the establishment of FDS by financial companies. Additionally, it will strengthen the liability of financial companies for compensation in cases where identity verification is not performed during financial transactions and promote the expansion of coverage and sales channels for insurance products that compensate for voice phishing damages.

According to financial authorities, voice phishing damages amounted to 122 billion KRW from the beginning of this year to April, a 43% decrease compared to the same period last year. The number of damage cases also decreased by 49% to 13,084 cases. Although voice phishing damages have recently slowed, the government expects damages to increase again once the COVID-19 disaster situation eases.

Voice phishing is carried out through various means such as phone calls, smishing (SMS phishing), pharming (malicious code), illegal websites, and malicious apps. The methods of voice phishing are becoming increasingly diverse and sophisticated.

Regarding dapo-phones, incidents mainly occur with prepaid phones and foreign-registered phones, where it is difficult to recognize identity theft. Internet phones that are hard to trace and overseas-originated numbers are also used in voice phishing through SIM boxes that can spoof domestic numbers (010).

This content was produced with the assistance of AI translation services.