90 Cases of Fraudulent Distribution of Local Love Gift Certificates Detected... Merchant Registrations Canceled

In October, 232 Local Governments Conducted Joint Crackdowns... Number of Inspections and Dispositions Decreased Compared to the First Half of the Year

[Asia Economy Reporter Lim Cheol-young] The Ministry of the Interior and Safety announced on the 14th that from October 1 to October 29, it conducted a nationwide crackdown on the fraudulent distribution of local love gift certificates across 232 local governments, resulting in 90 cases being investigated and penalized.

Among these cases, 90 merchant registrations were canceled. Of these, a fine of 8 million KRW was imposed on one case, and a total of 14.95 million KRW will be recovered from 25 cases. Additionally, 376 cases deemed relatively minor violations by local governments were subject to on-site guidance.

This nationwide crackdown on local love gift certificates is the second such operation following the first nationwide inspection conducted in the first half of this year. It was carried out to strengthen awareness of eradicating fraudulent distribution and to establish a sound distribution order in line with the expanding issuance trend of local love gift certificates. The second half crackdown was conducted by a public-private joint inspection team consisting of 1,068 people, including local government officials and employees of gift certificate operating contractors, inspecting approximately 240,000 affiliated merchants.

Compared to the first half, the number of investigations and penalties decreased by 20% (from 112 to 90 cases), and on-site guidance decreased by 73% (from 1,374 to 376 cases), indicating some improvement in the actual situation of fraudulent distribution following the first half crackdown and improvement measures. Among the 90 violations, paper-type gift certificates accounted for the largest number with 36 cases, followed by mobile-type with 35 cases, and card-type with 19 cases.

In particular, among the violations, fraudulent receipt and illegal exchange (25 cases) included 17 cases of paper-type, 5 cases of mobile-type, and 3 cases of card-type, showing that paper-type gift certificates are the most vulnerable to fraudulent receipt and illegal exchange. Furthermore, while the number of crackdowns on pre-discount type gift certificates was 86 cases, only 4 cases involved cashback-type gift certificates, indicating that pre-discount type gift certificates are relatively more vulnerable to fraudulent distribution.

Meanwhile, based on the results of this crackdown, the Ministry of the Interior and Safety plans to implement various measures to eradicate fraudulent distribution of local love gift certificates. First, the issuance of paper-type local love gift certificates, which were found to be relatively vulnerable to fraudulent distribution, will be gradually reduced, and the expansion of cashback-type local love gift certificates, promoted since the first half crackdown, will be pursued. Additionally, the anomaly transaction detection system will be enhanced to detect increasingly diverse cases of fraudulent distribution, and a real-time notification system will be established to enable prompt administrative actions.

The Ministry of the Interior and Safety plans to continue conducting nationwide crackdowns semiannually to eradicate fraudulent distribution of local love gift certificates. Kim Jang-hoe, Director of the Local Finance and Economy Office at the Ministry of the Interior and Safety, stated, “We will thoroughly crack down on merchants who exploit the purpose of local love gift certificates, which are promoted to revitalize local commercial districts, for unfair gains,” and added, “Along with crackdowns, we plan to improve the system so that local love gift certificates can provide practical help to small business owners struggling due to COVID-19.”

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