Small Loans Targeting Female Adolescents... Brutal 29,000% Interest as Service and Late Fees

[Asia Economy (Suwon) = Reporter Lee Young-gyu] Gyeonggi Province has uncovered six illegal loan sharks who lent money at exorbitant high interest rates to socially vulnerable groups such as female adolescents and committed various malicious acts if the loans were not repaid.

The Gyeonggi Province Fair Special Judicial Police Unit announced on the 13th that from April to June, they conducted an intensive investigation into illegal high-interest lending activities through reports, tips, undercover investigations, and mystery shopping both online and offline. They have criminally charged six illegal lenders and plan to transfer the case to the prosecution once the investigation is complete.

The province added that the total loan amount involved reached 2.1 billion KRW, with 644 victims.

Among the major cases uncovered, suspect A operated an unregistered lending business from January 2020 to September last year. He posted proxy deposit advertisements on Twitter such as "We provide proxy deposits. Please send a message. First transaction up to 30,000 KRW possible. No men accepted," then lent between 10,000 and 300,000 KRW to those who contacted him for urgent funds, collecting fees under the names of service charges and late fees (interest).

Most victims were female adolescents. Using this method, A lent 290 million KRW to 338 victims and collected 330 million KRW including interest. In one case, he lent 10,000 KRW and collected 18,000 KRW the next day including principal and interest. When annualized, this corresponds to a murderous interest rate of 29,200%. If the loan was not repaid on time, he engaged in illegal debt collection such as verbal abuse and threats via phone and KakaoTalk.

There were also cases where the suspect was a female adolescent. Sixteen-year-old B lent 15.29 million KRW to 247 victims from January to May this year using the same method and collected 21.29 million KRW in repayments, charging an annual interest rate as high as 20,075%. B lent only to women who contacted her on Twitter, providing loans through KakaoTalk open chat rooms, collecting personal information such as names, ages, phone numbers, and contacts of family and acquaintances.

Suspect C, a registered lender in Gangnam-gu, Seoul, lured low-credit merchants in the Siheung area from February to last month by offering loans under names like "100-day installment" and "10-day urgent loan," charging a 10% commission on the loan principal and a 30% high interest rate. C transferred more money than the requested loan amount to victims and received the difference in cash without records, applying an annual interest rate as high as 742%. Using this method, C lent 600 million KRW to 48 victims and collected 727 million KRW in repayments.

Unregistered lender D operated from March 2020 to March last year in the Pyeongtaek area, targeting small construction workers and self-employed individuals with monthly repayments called "monthly payments," demanding an annual interest rate of 48%, which is higher than the legal rate. D received 24% legal interest via bank transfer and the remaining 24% in cash, lending 1.2 billion KRW to five victims with this meticulous method. Notably, D had debtors sign ownership transfer and provisional registration contracts at a nearby judicial scrivener’s office, setting up provisional registration collateral to transfer real estate owned by debtors to the creditor before the loan maturity date. If the debtor failed to repay on time, D illegally seized ownership of the collateralized buildings, operating an illegal lending business.

The special judicial police used mystery shopping investigation techniques focusing on urban areas where flyer distribution is frequent. They arrested two unregistered lenders distributing indiscriminate illegal advertising flyers across Gyeonggi Province on the spot and took measures such as blocking advertising phone numbers.

Kim Young-soo, head of the Gyeonggi Province Fair Special Judicial Police Unit, said, "The investigation revealed increasingly cunning and bold methods such as proxy deposits for youth, large-scale expedition lending, and real estate seizure abusing legal systems. As the economy worsens, illegal financial activities targeting vulnerable groups are expected to spread, so we will strengthen related investigations to prevent further damage."

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