Warning on Fraudulent Investment Advisory Services... Up 116.8% Compared to Last Year

Consumer Agency Receives 2,832 Damage Relief Requests from January to June This Year

Types of Damages Related to Contract Termination.

[Asia Economy Reporter Lim Chun-han] As more people invest in stocks, cases of people being deceived by advertisements for 'high-yield investment information' and joining fraudulent investment advisory services are increasing. Fraudulent investment advisory services are services that provide stock and other financial investment information to unspecified individuals for a certain fee.

According to the Korea Consumer Agency on the 11th, from January to June this year, there were 2,832 damage relief applications related to fraudulent investment advisory services, an increase of 116.8% compared to the same period last year. Last year, there were 3,148 damage relief applications received.

Among the damage relief applications related to fraudulent investment advisory services received last year, 65.4% of contracts were made through 'telephone solicitation sales' and 29.2% through 'telecommunication sales,' meaning most contracts were non-face-to-face. Consumers leave their contact information after watching YouTube broadcasts or advertisement texts or participate in so-called 'free reading rooms,' and then the business operator induces subscription by phone, leading to contracts.

However, among the types of damage, 'contract cancellation' related damage accounted for 94.9%, indicating that it is not easy to cancel the contract once it is made. The types of damage related to contract cancellation mostly included 'refund refusal/delay' (69.8%), where cancellation is refused or contact is avoided causing processing delays, and 'excessive penalty charges' (25.1%), where penalties are charged based on a high normal price rather than the paid usage fee.

Analyzing 2,679 cases with confirmed contract amounts among the damage relief applications received last year, the average contract amount was 4.34 million KRW. By amount, '2 million to 4 million KRW' accounted for 43.2%, the largest portion, followed by '4 million to 6 million KRW' at 24.4%. High-priced contracts exceeding 10 million KRW also reached 92 cases.

Analyzing 3,045 cases where the age group of the damage relief applicants was confirmed, those in their 50s accounted for the largest portion at 31.1%, followed by those in their 40s (22.8%) and 60s (21.0%). Although the number of damage relief applications from people in their 20s and 30s was not higher than other age groups, the increase rate of damage relief applications compared to 2019 was 58.9% and 17.4%, respectively, higher than other age groups.

The Consumer Agency advised not to be deceived by exaggerated advertisements such as 'guaranteed high returns' or 'full refund if the yield is not met' and to suspect illegality when high returns are promised. They also urged consumers to pay by credit card installment and to keep evidence such as text messages, call recordings, or certified documents when requesting cancellation.

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