Gyeonggi Special Judicial Police Crack Down on 'Daebu Operators' Threatening with Annual 3338% Brutal High Interest Rates

[Asia Economy (Suwon) = Reporter Lee Young-gyu] Twenty-three registered loan operators and others who have been engaging in illegal high-interest lending practices with annual interest rates up to 3338% targeting vulnerable groups and small business owners who find it difficult to use formal financial institutions were caught in an investigation by the Gyeonggi Province Fair Special Judicial Police Unit.

The Gyeonggi Province Fair Special Judicial Police Unit, in collaboration with the Gyeonggi Southern and Northern Police Agencies, formed a joint investigation team from July 12 to August 11 to conduct a focused investigation on violations of the Loan Business Act and the Debt Collection Act. On the 1st, they announced that 12 of the 23 new illegal online loan operators were sent to the prosecution, and the remaining 11 were also criminally charged.

The special judicial police added that the total loan amount involved reached 6.319 billion KRW, with 411 victims.

Regarding major violations, two registered loan operators, including Mr. G, lent 1.033 billion KRW to 260 victims through an internet loan platform site from May last year to June this year, collecting 315 million KRW as upfront interest. Notably, although the standard loan contract stated an interest rate of 2% per month (24% annually), they actually charged high-interest rates equivalent to up to 3338% annually.

There were also cases where unregistered loan operators advertised loans on internet loan platform sites, charged high-interest rates, and engaged in illegal debt collection.

Mr. N, without registering the loan business with the competent authority, lent 203.7 million KRW to 98 people over four months through an internet loan site and collected 31 million KRW in interest at an annual rate of up to 1825%. Mr. N particularly engaged in illegal debt collection by threatening and verbally abusing debtors when principal and interest payments were delayed, and even contacted their family or acquaintances.

There was also a case where an unregistered loan operator was caught for illegal high-interest lending after signing loan contracts. Mr. D, who had previously been fined for illegal lending activities, lent 2.83 billion KRW without registering the loan business, deducting upfront interest and fees, and collected 327 million KRW in interest at an annual rate of up to 43%. Moreover, when debtors failed to pay interest, Mr. D applied for auction on mortgaged real estate and additionally collected auction application fees, thereby gaining unfair profits and was arrested this time.

Kim Young-soo, head of the Gyeonggi Province Fair Special Judicial Police Unit, emphasized, "As COVID-19 prolongs, illegal private financing is likely to spread targeting small business owners and low-credit citizens who need funds. We will conduct comprehensive crackdowns on illegal private financing to protect socially vulnerable groups and strive to create a fair society."

Meanwhile, the province plans to strengthen investigations into online illegal private financing, including increasingly sophisticated internet loan brokerage sites and proxy payment activities targeting youth.

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