Theft of 5 Billion Won Over 10 Years at One Stationery Store, Court Rules "VAN Company Also Liable for Compensation"

Second Trial Court Overturns First Trial, Holds VAN Company Responsible
"Orders 1.5 Billion Won Compensation to Stationery Store" Verdict

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[Asia Economy Reporter Kim Daehyun] Regarding a theft case involving tens of billions of won over more than 10 years at a large stationery store in Seoul Express Bus Terminal Station, the court ruled that the company contracted for value-added network (VAN) services with the stationery store also bears compensation responsibility. ▶Refer to Asia Economy March 5 article 'Stealing 5 Billion Won Worth from One Stationery Store Over 10 Years "No One Knew" [Seocho-dong Legal Story]'

According to the court on the 26th, the Seoul High Court Civil Division 16 (Presiding Judge Cha Munho) recently partially ruled in favor of the plaintiff in the appeal trial of a damages claim lawsuit filed by Stationery Store A against Company B for approximately 5.044 billion won, ordering "Company B to pay Stationery Store A about 1.513 billion won."

Previously, Mr. Yang, a customer of Stationery Store A and operator of a POS installation and repair business, learned in 2010 how to avoid payment by arbitrarily canceling approvals through a certain program after credit card payments. In this way, Mr. Yang embezzled about 5.04 billion won worth of stationery items from Stationery Store A over 10 years in approximately 1,400 instances, reselling the products and spending the proceeds on living and entertainment expenses. However, Mr. Yang was caught and sentenced to five years in prison after being convicted of fraud under the Act on the Aggravated Punishment of Specific Economic Crimes in a criminal trial.

Stationery Store A filed a civil lawsuit claiming that "Company B, which signed the VAN service contract, should jointly compensate for the damages with Mr. Yang." Company B was providing franchise management services such as credit card inquiry, approval, sales slip purchase, terminal installation, and after-sales service to Stationery Store A. During the trial, Company B argued, "With the current level of technology, it is impossible to prevent this crime," and claimed, "This was an unprecedented incident exploiting a technical blind spot that could not have been foreseen or prevented."

The first trial recognized only Mr. Yang's liability for compensation. It also stated, "There is insufficient evidence to consider that Company B abetted the fraud or violated customer protection duties," and pointed out, "The financial authorities' task force (TF) has not completely fixed the vulnerabilities of the POS system used in this fraud." In fact, in May 2020, the Financial Supervisory Service and others formed a TF and devised measures such as assigning a unique 15-digit number to terminals, but it was found difficult to apply these improvements to small and medium-sized POS companies.

On the other hand, the second trial found that Company B also bears compensation responsibility. The court stated, "Company B had the obligation to establish a secure service system to protect its customers, who are credit card franchisees," and "Although the TF did not reach a consensus among all parties involved, it was not impossible for Company B to prepare at least minimal countermeasures. Even if both the value-added network operator and the POS company had to develop new related software, it would only take more than nine months, but development itself is not impossible."

However, the court limited Company B's compensation responsibility to 30% of the total damages. The court pointed out, "Since 2018, most of the crimes involved fraudulent cancellations exceeding 10 million won per day. Stationery Store A could have easily checked for fraudulent credit card cancellations by reviewing daily sales, credit card deposits, and inventory details, but failed to properly verify for a long time," and added, "Stationery Store A also significantly contributed to the occurrence and expansion of the damages."

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