[In-Depth Look] The Republic of Fraud, The True Face of South Korea

Professor Kim Do-woo, Department of Police Science, College of Law, Gyeongnam National University

During the past two years when the spread of COVID-19 infections was rampant, the number of fraud cases occurring in the Republic of Korea has exceeded an average of 320,000 annually. This accounts for nearly 20% of all crimes, and in the past, the World Health Organization (WHO) once evaluated Korea’s fraud crime incidence rate as the highest among 37 OECD countries. Lawyer Kim Judeok, drawing an analogy to the rampant fraudsters in Korea, warned of the risks early on through his book titled "Surviving in the Fraud Republic." Nevertheless, the stigma that Korea is an "environment conducive to fraud crimes" has not been erased, as the annual number of fraud crimes is rapidly increasing, and extreme choices by victims are even occurring.

Recently, fraud methods have become increasingly sophisticated and larger in scale. The targets of fraud are not only adults but also the elderly and children, and fraud targeting economically vulnerable groups such as retirees and job seekers is also occurring. Moreover, as non-face-to-face situations continue due to COVID-19, electronic commerce and financial transactions via mobile devices have increased, leading to phishing scams that impersonate government disaster relief funds and government-supported loans to demand cash withdrawals or account transfers. There are also smishing scams that deceive recipients into clicking links embedded with malware by sending text messages similar to those frequently sent by local governments or the Korea Disease Control and Prevention Agency for COVID-19 management. Recently, new methods have emerged, such as hacking virtual currency exchanges to gain financial benefits. Additionally, the use of open banking now allows for non-face-to-face loans and even insurance cancellations with just one account’s information, effectively enabling the theft of an individual’s entire assets.

What is more serious is the recovery of damages. Even if fraudsters are caught, the likelihood of victims recovering their losses is very slim. Typically, victims apply for relief through civil procedures. The problem is that to obtain relief through civil trials, fraud victims must directly prove the evidence themselves. However, it is difficult for individuals, who are not investigative agencies, to secure related evidence, making it an impractical remedy. Although there are the "criminal compensation application system" and the "Confiscation of Corrupt Property Act" at the criminal procedure stage for damage recovery, the court rarely accepts these due to prolonged hearings on the amount of damages, which risks undermining judicial justice.

The bare truth of the Fraud Republic, Korea, does not end here. The recidivism rate of fraud criminals is close to 40%, overwhelmingly higher than other crimes. This is partly due to the lenient punishments imposed by the state for fraud offenses. In fact, because so many fraud-related complaints occur, investigative authorities generally do not conduct arrest investigations if the damage amount is less than 100 million KRW. The maximum sentence by courts is imprisonment for up to 10 years or a fine of 20 million KRW, but according to sentencing guidelines, a sentence of five years or more imprisonment is only imposed if the embezzled amount exceeds 5 billion KRW. As a result, even if fraudsters are caught for fraud, they experience light punishments by settling with victims and then re-engage in fraud crimes.

Crime economist Becker argued based on rational choice theory that when "punishments commensurate with criminal acts" exist, "criminal acts can be stopped or prevented." The Republic of Korea, stigmatized as the Fraud Republic, currently provides a heaven-like environment where fraudsters can operate freely, while the legal and institutional measures to prevent this remain ineffective even after more than 20 years. Most frauds occurring during economic recessions are likely livelihood frauds targeting vulnerable groups. If, during this expected prolonged economic downturn, economically vulnerable groups such as the young and the elderly suffer from fraud damages and endure hardship, the trust in our society will decline, and our society will have to bear various side effects accordingly. To erase the bare face of the Fraud Republic, at least minimal preventive measures to deter fraud offenses must be established.

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