"'Interest Income Bait' Irregular Sales of Sangjo Products Increasing... 'Consumer Damage Warning'"

Increase in Irregular Sales Such as Inducing Subscription to Funeral Services with Interest Income Bait and Introducing Conditional Commission-Based Membership
Rapid Rise in Cases of Disappearing After Luring for Commission Fraud

[Asia Economy Reporter Lim Cheol-young] Mr. J (75 years old) received an enticing proposal from the ‘oo Pension’ company that if he invested a certain amount, he could receive daily interest of 0.25% to 0.3%. The minimum investment amount was 1 million won, but when he said he did not have 1 million won, ‘oo Pension’ told him that if he signed up for a funeral service product, he could receive a recruitment commission and that they would return that commission so he could invest with that money. They also said they would pay the monthly installments on his behalf for the first 3 to 4 months. Mr. A signed up for the funeral service product under this proposal but was unable to receive the recruitment commission, and the ‘oo Pension’ representative who promised to pay on his behalf has since disappeared.

Recently, there have been cases where elderly people are approached with proposals to earn pocket money by signing contracts for funeral service products or recruiting acquaintances with promises of recruitment commissions, and once the contracts are finalized, the recruiters take the commissions and disappear.

On the 28th, Seoul City announced that despite the prohibition of multi-level marketing sales methods for funeral service products under the Installment Transactions Act, there has been a rapid increase in deceptive sales practices such as recruiting acquaintances who then recommend the product to others with promises of commission payments, as well as false information about interest payments to mislead consumers. In particular, when recruiting for funeral service products through acquaintance introductions, there is a risk of unknowingly becoming an illegal sales agent, so special caution is advised.

In fact, in March, one funeral service company became suspicious of an unusually high performance at one of its sales branches and conducted a full investigation of the contracts. Out of a total of 262 cases, 258 were found to have been signed through illegal sales methods such as false contracts involving identity theft by intermediate sales agents to collect recruitment commissions.

Looking at cases of illegal sales and false contracts for funeral service products, many involved luring people who had no intention of signing up by paying their monthly installments for several months, then drawing in acquaintances under the pretext of commission payments, after which the sales manager took the recruitment commissions and disappeared. There were also cases of identity theft for false sign-ups, falsification of contract information, and mutual sign-ups among recruiters to collect commissions.

Seoul City emphasized, “The stolen personal information in this process can be used without the person’s knowledge for false sign-ups of various products and even crimes, leading to secondary and tertiary damages. Special caution is needed when signing up for funeral service products simply based on trust in acquaintances or for the purpose of earning interest income rather than for using the funeral services.”

Seoul City plans to take strong management and investigation measures as illegal sales of funeral service products are being conducted systematically and infiltrating multiple funeral service company branches, causing harm to the elderly and vulnerable groups through the same methods. First, to prevent similar damages from continuing, they requested a thorough investigation of recently signed contracts from funeral service companies based in Seoul and shared plans for civil and criminal legal responses if similar cases occur.

Park Ju-seon, Seoul City’s Fair Economy Officer, said, “If funeral service companies pay tens of billions of won in commissions to illegal organizations due to false contracts, the financial soundness of the companies themselves may decline, and this damage will directly affect the citizens who signed up for the products. We will thoroughly monitor the ongoing legal actions and share preventive measures with the industry to create a healthy funeral service market.”

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