"Buying Monkeys and Dragons Pays Off": Digital Financial Crimes Luring Young People

High-Profit Guaranteed Pseudo-Financial Platforms Flourish
Youth Targeted with High-Interest Short-Term Loans via 'Proxy Deposits'
Job Seekers Targeted by Document Forgery 'Work Loans' and More
Fraud Schemes Evolving Daily

[Asia Economy Reporter Kangwook Cho] #. A, a high school girl, wanted to buy goods of her favorite idol but had no money. She found out through SNS (social media) that there was a 'proxy payment' service where someone else pays on her behalf and she repays later, so she used 'proxy payment' from several people for amounts ranging from 20,000 to 100,000 KRW. However, after continuously rolling over the payments, she ended up having to pay 4 million KRW including interest.

#. B, who got addicted to online gambling, used proxy payments with a weekly interest rate of 50% (annual interest rate of 2600%) to raise gambling funds since high school. After 4 years, his gambling debt ballooned to 37 million KRW.

With the development of the internet and SNS, new types of digital financial crimes are rampant. From 'investment scams' that pretend to use innovative methods under the guise of P2P (peer-to-peer lending) and e-commerce platforms to small high-interest loan crimes called 'proxy payment' targeting teenagers, the methods are evolving. Especially, while financial scams in the past mostly targeted the elderly, recently they have been targeting financially and legally vulnerable groups such as teenagers and job seekers, expanding the target of financial crimes to all age groups.

Monkey Legend capture.

◆ Fraudulent quasi-financial platforms disguised as high-yield investment schemes are rampant = The Financial Supervisory Service (FSS) recently issued a warning that fraudulent quasi-financial platforms trading virtual characters are rampant, causing serious damage, targeting investors seeking high returns amid a low-interest rate environment. They pointed out that these are typical 'Ponzi schemes' and 'hot potato' scams where there is no source of profit and existing members' returns are paid with new members' investments.

According to the FSS, more than 40 companies including Monkey Legend, Dragon Star, 12 Zodiac Animals (Animal Farm), and Unicorn City created virtual characters such as monkeys, dragons, unicorns, fish, jewels, gods, fruits, golf balls, and buildings, and recruited members by claiming that high returns could be generated by buying and selling these characters among members. These companies advertised that if a character is held for a certain period, its price automatically rises, and members' profits come from the trading margin by selling at a price higher than the purchase price. They claimed that the character price inevitably rises as trading repeats, and when the price reaches a certain amount, one character splits into multiple characters.

Dragon Star capture.

They also promoted multi-level marketing profits by paying incentives as a certain percentage of the trading profits of the referred members when new members are directly introduced. Furthermore, they showed typical multi-level business behaviors by controlling negative opinions and complaints of members through group chat rooms and managing to prevent member attrition.

Actual proxy payment message posted on SNS.

◆ Secretive 'proxy payment' transactions targeting teenage girls = Operators of 'proxy payment' targeting teenagers mainly posted proxy payment advertisements on SNS to lure teenagers who needed concert tickets, celebrity merchandise, or game fees. The borrowed amounts were small, around 100,000 KRW, but the short-term (2 to 7 days) interest rates were 20 to 50%. When converted to annual interest rates, this amounts to over 1000%.

In particular, if repayment was late, a late fee of 1,000 to 10,000 KRW per hour was charged, disguised as a 'late fee.' The problem is that terms like 'service fee' and 'late fee' are used, and idol photos are posted to make it appear like a financial transaction between acquaintances. Moreover, under the pretext of identity verification, contact information of family and friends is requested, and many cases target only teenagers (especially females). Some teenagers even engaged in proxy payments as a way to earn pocket money. It was investigated that this has evolved into a form of school violence where friends' money is extorted in the form of loan sharking.

◆ 'Fake loans' tempting income-less college students and job seekers = 'Fake loans' are also rampant, where they approach unemployed young people in urgent need of money, forge false documents, and take a large amount equivalent to 30% of the loan amount. The FSS explained that most users of fake loans are 20-something (born in the 1990s) college students and job seekers, and the loan amounts were relatively small (4 million to 20 million KRW). Especially, all loans were conducted in a non-face-to-face (untact) manner. The FSS warned that if young people get involved in fake loans, they may face criminal penalties (imprisonment or fines), be registered as financial disorder offenders restricting financial transactions, and suffer disadvantages when seeking employment.

With the spread of the novel coronavirus disease (COVID-19), smishing crimes that lure victims with 'phishing texts' such as infection confirmation, additional emergency disaster relief fund applications, and mask delivery confirmations are also rapidly increasing. According to the National Police Agency, smishing cases from January to June this year totaled 251, more than three times the 83 cases during the same period last year. Last year's total smishing cases were 208, which has already been surpassed in the first half of this year.

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