Gyeonggi Special Judicial Police Uncover 'Illegal Private Loans' Hurting Ordinary People with Annual Interest Rates of 2840%

[Asia Economy (Suwon) = Reporter Lee Young-gyu] Gyeonggi Province has uncovered eight unregistered loan sharks who have been exploiting low-income citizens by employing new fraudulent methods such as forcing multi-level marketing products on borrowers and including the product prices in the loan amounts to charge annual interest rates exceeding 900%, or by lending money for gambling and collecting illegal interest rates as high as 2840%.

On the 20th, the Chief of the Gyeonggi Province Special Judicial Police Unit announced that since December of last year, based on reports about these new fraudulent methods, they conducted focused investigations on illegal high-interest lending activities targeting socially and economically vulnerable groups around major shopping districts and traditional markets. Among the eight illegal lenders identified, six have been referred to the prosecution, and the remaining two, who have been criminally charged, will also be sent to the prosecution once investigations are completed.

The province added that the total loan amount involved reached 2.4 billion KRW, with 203 victims.

In a major violation case, suspect A operated an unregistered lending business in Bucheon City, approaching low-credit merchants running small businesses such as clothing stores and restaurants. He enticed them by offering loans under the pretexts of 100-day installment loans or 10-day quick cash loans, deducting 10% of the principal as upfront interest, and forcibly selling beverages marketed through multi-level marketing as health drinks, including their prices in the loan amount. This method resulted in interest rates of 10-20% over 10 days.

From March to July last year, A lent 341 million KRW to 148 victims and collected 683 million KRW in repayments, earning 342 million KRW in high-interest payments equivalent to an annual interest rate of 936% during that period.

Suspect B operated an unregistered lending business in Pyeongtaek City, approaching self-employed individuals by offering to promote their stores to help their businesses and providing loans if quick cash was needed. He charged a 10% upfront interest and daily interest fees under the guise of advertising agency commissions, lending 5.28 million KRW and collecting 7.8 million KRW within a month, which corresponds to an annual interest rate of 817%. From May 2020 to October last year, he lent a total of 61.06 million KRW over nine occasions and collected 89.4 million KRW in principal and interest, earning 28.34 million KRW in high-interest payments.

Suspect C, from August 2020 to December last year, lent money to victims who lost all their money gambling at motels in Ingye-dong, Suwon City, often working with delivery workers. He lent 1 million KRW to a victim, deducting 100,000 KRW as upfront interest and giving 900,000 KRW in cash, then collected 1.6 million KRW a week later including interest. Using this method, he lent a total of 75.5 million KRW to 22 people and collected 109 million KRW in interest. C’s annual interest rate was an astonishing 2840%.

Suspect D, who operated an unregistered lending business in Suwon and Hwaseong cities, lent quick cash to small business owners, deducting 10% of the principal as upfront interest and charging 10% interest on the principal every ten days. From May 2020 to December last year, D lent 1.92 billion KRW to 27 victims and collected 265 million KRW in interest, corresponding to an annual interest rate of 1143%.

It was confirmed that these suspects frequently engaged in illegal debt collection practices such as making repeated phone calls, visiting borrowers’ homes, and threatening to inform family and acquaintances about the loans if repayments were delayed.

In addition, the Special Judicial Police Unit used “mystery shopping” investigation techniques focusing on urban areas where flyer distribution is frequent. They apprehended four individuals distributing illegal advertising flyers indiscriminately across Gyeonggi Province, seized 2,500 illegal flyers on site, and blocked all advertising phone numbers.

Kim Young-soo, Chief of the Gyeonggi Province Special Judicial Police Unit, emphasized, “With the prolonged COVID-19 crisis, there is a high risk of illegal private financing spreading among low-income and low-credit citizens. We will strengthen investigations into illegal private financing and do our best to protect socially vulnerable groups and create a fair society.”

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