Gyeonggi Special Judicial Police Arrest 21 Including Loan Sharks Who Exploited Ordinary Citizens with Annual Interest Rates of 3650%

[Asia Economy (Suwon) = Reporter Lee Young-gyu] Gyeonggi Province has uncovered 21 unregistered lenders and others who have been engaging in illegal high-interest lending practices with annual interest rates as high as 3,650% targeting small business owners in urgent need of funds.

In celebration of Chuseok and other holidays, since September, Gyeonggi Province has conducted focused investigations into illegal high-interest lending activities targeting socially and economically vulnerable groups around major shopping districts and traditional markets. On the 1st, the province announced that out of 21 illegal lenders targeting low-income and low-credit individuals, 5 have been referred to the prosecution, and the remaining 16 will also be sent to the prosecution once investigations are completed.

Regarding major violations, two unregistered lenders, including Mr. A, operated general stores within traditional markets and provided loans to nearby small merchants in need of business operating funds, charging illegal high-interest rates. They organized their illegal lending operations by dividing roles individually, with some recruiting people in urgent need of funds and others acting as lenders, sharing the profits from lending. Using methods such as deducting 10% of the loan principal as an upfront interest or charging interest rates between 10% and 20%, from February 2018 until recently, over three years, they lent approximately 670 million KRW to about 280 victims, collecting high-interest payments equivalent to an annual interest rate of up to 3,650%, leading to their detection.

Mr. B, who did not register his lending business with the competent authorities, was caught lending to victims who contacted him in urgent need of funds under conditions such as "100-day installment" and "monthly repayment." Over two years, Mr. B lent 750 million KRW to about 90 people and collected 43 million KRW in interest, corresponding to an annual interest rate of up to 124%. He also demonstrated meticulousness by using promissory notes prepared at the time of the loan contract to file lawsuits against debtors.

There was also a case where illegal high-interest lending was conducted after receiving real estate owned by the debtor as collateral.

Mr. C, an unregistered lender engaged in construction, approached three small construction business owners in need of operating funds, received real estate owned by the debtors as collateral, and lent a total of 1.047 billion KRW over 19 transactions. Mr. C is suspected of deducting upfront interest and fees and collecting 289 million KRW in interest, equivalent to an annual interest rate of up to 2,940%.

Mr. C was arrested after setting provisional seizures on the debtor’s real estate and engaging in illegal debt collection practices such as verbal abuse and threats when the debtor’s principal and interest repayments were delayed.

In addition, the provincial special judicial police used "mystery shopping" investigation techniques focusing on urban areas where flyer distribution is frequent, arresting 16 individuals on the spot who indiscriminately distributed illegal advertising flyers throughout Gyeonggi Province and confiscating 28,000 illegal flyers from them.

Among them was a lender who, after lending 3 million KRW to a self-employed person who applied for a loan after seeing a flyer, repaid 3.5 million KRW (annual interest rate of 154%) over 100 days by using the victim’s check card to withdraw 35,000 KRW daily to avoid revealing his identity.

Kim Young-soo, head of the Provincial Fair Special Judicial Police Unit, emphasized, "As the year-end and New Year approach, there is a concern that illegal private financing will spread targeting low-income and low-credit citizens in need of funds. We will conduct comprehensive and focused crackdowns on illegal private financing to protect socially vulnerable groups and strive to create a fair society."

The province plans to monitor increasingly sophisticated internet loan brokerage sites and communities to strengthen investigations into online illegal private financing and proxy deposit activities targeting youth. Additionally, the "Illegal Private Financing Damage Report Center" will be actively utilized to support youth victims and receive reports and tips.

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