Damage Amounting to 44.5 Trillion Won... Strong Calls for Crackdown on 'Fraud Crimes' Devouring Ordinary Citizens

Police Arrest 29,000 People in First Half Special Crackdown
Voice Phishing, Internet Fraud, Insurance Fraud, and More
Widespread Regardless of Type

[Asia Economy Reporter Lee Gwan-ju] 'Fraud crimes' that erode the livelihood of ordinary people are evolving rapidly. Every year, the number of fraud cases and the amount of damage increase significantly, and the types of fraud are diverse, including cyber fraud, telephone financial fraud (voice phishing), and insurance fraud. To prevent such fraud crimes, strong measures including 'disclosure of personal information' are required.

Fraud Crimes Without a 'Brake'... Last Year's Damage Amount Reached 44 Trillion Won

According to the National Police Agency, the number of fraud crimes in South Korea increased by about 40,000 cases annually, from 267,419 cases in 2018 to 302,038 in 2019, and 345,005 last year. In particular, the property damage caused by fraud crimes last year amounted to 44.5843 trillion won, an 84% increase compared to the previous year (24.2057 trillion won). Among these, cases with damage amounts under 10 million won accounted for 55%, indicating that the increase in damage was due to a large number of small-amount fraud cases.

The National Investigation Headquarters of the National Police Agency conducted a 'Special Crackdown on Fraud Crimes in the First Half of the Year' for five months from February to last month, arresting 29,881 people and detaining 1,929. By type of crime, cyber fraud accounted for the largest number with 12,084 arrests, followed by telephone financial fraud (voice phishing) with 11,248, insurance fraud with 5,602, traffic accident insurance fraud with 659, and jeonse fraud with 168.

During this period, the police also focused on cracking down on the four major methods of telecommunication financial fraud: burner phones, burner bank accounts, phone number manipulation relay devices, and illegal currency exchange activities. They arrested 3,359 people (116 detained), seized 31,617 burner phones and related devices, and uncovered illegal currency exchange amounts totaling 31.2 billion won. The Voice Phishing Investigation Unit of Gangwon Police Agency arrested 10 core members of an organization that supplied burner bank accounts worth 1.4 trillion won, the largest scale in the country, and a total of 82 people including lower-level members.

An organization distributing the nation's largest-scale forged bank accounts, into which criminal proceeds from various crimes such as voice phishing (telephone financial fraud), cyber gambling, and online goods fraud amounting to 1.47 trillion won flowed, has been completely dismantled.
[Photo by Gangwon Police Agency]

From Voice Phishing to Internet Fraud and Insurance Fraud... Fraudsters Without Type Boundaries

Voice phishing, a frequent type of fraud crime, remains prevalent. The Seodaemun Police Station in Seoul arrested 35 suspects, including call center counselors, who impersonated Financial Supervisory Service employees from December 2014 to recently, deceiving 262 people into depositing a total of about 1.05 billion won into virtual accounts of the Financial Supervisory Service under the pretense of determining involvement in crimes. Among them, 26 were detained.

Additionally, the Northern Gyeonggi Police Agency arrested six people, including remittance agents of a domestic voice phishing organization, who impersonated financial institution employees and remitted about 5 billion won to the ringleader through currency exchangers; four of them were detained. This indicates that cases of being deceived by 'public institution impersonation' voice phishing still persist.

Fraud crimes are not limited to voice phishing. The Uijeongbu Police Station in Gyeonggi arrested 75 suspects who repeatedly caused intentional traffic accidents and falsely or exaggeratedly hospitalized to fraudulently claim about 600 million won in insurance money. This is a typical traffic accident insurance fraud method. The Western Seoul Police Station arrested four suspects who, despite having no intention or ability to return officetel rental deposits, embezzled about 2 billion won in deposits from 17 victims; three were detained. Since officetel jeonse and monthly rent fraud mainly target young people and low-income groups, the crimes are highly condemnable.

Fraud methods are also evolving. The development of information and communication networks is the biggest factor. In fact, the Cyber Investigation Unit of the Northern Gyeonggi Police Agency arrested 15 suspects, including the ringleader of a criminal organization, who lured victims to a fraudulent site by promising electronic lottery betting investment guidance, showed them as if they had won large profits, and embezzled 6 billion won from 171 people under the pretext of refunding profits. This method involved inducing access to a fake site and then stealing money.

Especially this year, cryptocurrency-related fraud surged. The representative case is the 'V Global' incident, where about 69,000 people were deceived into investing in a self-issued cryptocurrency with promises of principal guarantees and high returns, resulting in embezzlement of about 3.85 trillion won.

System Improvement and Strengthened International Cooperation... Calls for Enhanced Disclosure of Personal Information and Establishment of Dedicated Units

The police are responding to these fraud crime realities with various measures. First, they focus on 'tracking criminal proceeds' investigations to fundamentally block criminal intent and enable substantial recovery of damages. During this period, the amount of confiscation and seizure for recovering criminal proceeds reached 431.5 billion won, an increase of 238 times compared to the previous year.

Moreover, despite difficulties in international cooperation due to COVID-19, the police conducted a full investigation of fraud suspects who fled abroad in the first half of the year, newly issuing 445 Interpol red notices and repatriating 75 fraud suspects who fled overseas. This is about 88% higher than the same period last year. Considering that many voice phishing organizations operate from overseas bases, international cooperation is essential.

In addition, the police actively participated in legislative activities to improve related laws and systems by cooperating with relevant agencies to promote crime prevention and rapid damage recovery through disclosure of fraudsters' personal information and suspension of burner phone usage. In particular, disclosure of fraudsters' personal information is gaining attention as a measure to strengthen crime prevention and response.

The Industry-Academic Cooperation Foundation of Dongguk University, commissioned by the National Police Agency, proposed in the report titled 'Analysis of the Occurrence and Causes of Fraud Crimes and Police Response Measures' that 'disclosure of suspects' personal information' should be introduced to prevent fraud crimes and strengthen punishment. For multi-fraud offenders who commit fraud against unspecified large numbers of people, such as voice phishing and illegal multi-level marketing, disclosing personal information can eliminate the risk of crime if habituality and risk of recidivism exist.

The report also suggested establishing a 'Korean-style Fraud Information Analysis Agency' to unify the currently scattered fraud-related information collection tasks among the Police Investigation Bureau (general fraud), Cyber Investigation Bureau (cyber fraud), and Financial Services Commission (telecommunication financial fraud). The report stated, "If additional personnel and resources necessary for fraud information analysis are expanded for police experts and economic crimes are integrated and analyzed, effective responses that provide much greater benefits to the public, such as early suspect detection and prevention of additional damage, can be achieved."

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