"Borrowed 18.8 Million Won but Must Repay 28.97 Million Won" 'Jak-eop Daechul' Targeting University Students and Job Seekers

Young Adults in Urgent Need of Cash Obtain Loans from Savings Banks Using Forged Documents
Financial Supervisory Service Issues Consumer Warning Alert

Work Loan Procedure / Source: Financial Supervisory Service

[Asia Economy Reporter Kangwook Cho] A university student A, born in 1994, urgently needed money but was unable to secure a loan from financial institutions due to lack of income verification. In March last year, A obtained forged salary and employment certificates through loan broker B and borrowed 18.8 million KRW from two savings banks. A paid B a fee amounting to 30% of the loan, 5.64 million KRW, and actually received only 13.16 million KRW. However, the total amount A had to repay to the banks over three years, including interest, reached 28.97 million KRW.

The practice of 'jageopdaechul' (loan brokerage fraud), where brokers approach unemployed young people in urgent need of cash, forge false documents, and charge exorbitant fees amounting to 30% of the loan amount, has been rampant, prompting financial authorities to issue consumer warnings.

On the 14th, the Financial Supervisory Service (FSS), together with the savings bank industry, verified the authenticity of income verification documents such as employment certificates and salary statements submitted by customers (borrowers). They discovered that young people with little social experience, in urgent need of cash, paid about 30% of the loan amount as a fee to specialized forgers (so-called 'jageopdaechul brokers') and submitted forged income verification documents to obtain loans from savings banks.

According to the FSS, 43 cases of 'jageopdaechul' were detected this year, with total loan amounts reaching 272 million KRW. The FSS explained that most users of jageopdaechul were in their 20s (born in the 1990s), including university students and job seekers, and the loan amounts were relatively small (4 to 20 million KRW). Notably, all loans were conducted through non-face-to-face methods.

In fact, when savings banks verified employment status by phone, the jageopdaechul brokers (document forgers) confirmed the employment status, and other income verification documents were forged to closely resemble originals, making detection during the loan process difficult, according to the FSS.

An FSS official warned, "Users of jageopdaechul typically pay 30% of the loan amount as a fee to brokers and must pay annual interest rates of 16-20% to savings banks, so the actual usable amount is extremely limited," adding, "This can lead to a vicious cycle where borrowers must borrow from others or take out new loans to repay principal and interest."

Additionally, submitting false or forged documents to financial companies related to loans results in being registered as a financial disorder offender, restricting financial transactions with all financial companies and potentially causing disadvantages when seeking employment at financial institutions.

Jageopdaechul is a fraudulent loan involving forgery of public or private documents. Both the jageopdaechul brokers and loan applicants are criminally liable as accomplices.

Therefore, it is advised that young people (including university students) first check for public support programs such as the ‘Hae-sal-lon Youth (Youth)’ by the Korea Inclusive Finance Agency or the ‘Student Loan’ by the Korea Student Aid Foundation before applying for loans from financial companies.

The FSS plans to strengthen the non-face-to-face loan process of savings banks to prevent jageopdaechul in advance, share characteristics and detection methods of jageopdaechul obtained during inspections with the industry, and strictly respond by reporting detected cases to investigative agencies.

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