'Jeonse Fraud Special Act' Fails to Pass... Claims for Priority Repayment of Small Amounts Also Arise

With "Principles Even in Bond Purchases"
Sim Sang-jung "Priority Repayment of Small Amounts up to 85 Million Won"
Passage in This Week's Plenary Session Uncertain

Legislation to support victims of Jeonse fraud is struggling to find common ground. There remains a significant gap between the ruling and opposition parties on how to define Jeonse fraud victims and whether the government should purchase Jeonse deposit refund claims.

The National Assembly Land, Infrastructure and Transport Committee's Land Law Review Subcommittee held discussions on a special law to support Jeonse fraud victims on the 3rd but failed to reach an agreement. Following the subcommittee meeting on the 1st, the review of the special law began, but differences between the ruling and opposition parties were reaffirmed.

The opposition party and victims have demanded a 'support first, recourse later' approach, where government-affiliated bond purchasing institutions such as the Korea Asset Management Corporation (KAMCO) would first buy the deposit refund claims and later recover costs through subrogation. Democratic Party lawmaker Maeng Seong-gyu stated, "There must be either a refund of the deposit or other support measures equivalent to the deposit refund," adding, "Only then can victims be persuaded, and the special law can fulfill its intended purpose."

On the 3rd, at the National Assembly in Yeouido, Seoul, Kim Jeongjae, the subcommittee chairman, presided over the meeting of the Land, Infrastructure and Transport Committee subcommittee. On this day, the subcommittee reviewed bills related to the Special Act on Jeonse Fraud. Photo by Kim Hyunmin kimhyun81@

However, Kim Jeong-jae, the ruling party's secretary of the Land Committee from the People Power Party, reaffirmed his opposition to the purchase of deposit claims in a press briefing after the meeting, saying, "At least the government and ruling party's plan has clear principles regarding bond purchases." Kim explained, "There are people who have been defrauded in commercial properties or monthly rent scams, suffering private fraud or similar cases where they cannot recover their deposits," and added, "Also, from the perspective of economic damage caused by government policy failures, such as voice phishing, which is akin to fraud, we cannot ignore the issue of fairness regarding these various damages."

He continued, "The idea that the state directly intervenes in private contracts to compensate all losses to some extent requires national consensus," emphasizing, "This shakes the fundamental principles of the state, so national consensus is necessary." He added, "The idea we came up with is the right of first refusal," noting, "Strictly speaking, this may violate the Equality Act, but nonetheless, the government’s position was to actively support those who suffered damages."

Regarding the Korea Land and Housing Corporation (LH) right of first refusal, he explained, "If the affected tenant does not want to live in the house, LH directly purchases the house publicly," and added, "After acquiring all such houses as public housing, they would be rented out at 30-50% below market price for up to 20 years."

During the meeting, there was also a suggestion to prioritize the repayment of small deposits instead of purchasing deposit claims. Justice Party lawmaker Shim Sang-jung proposed, "We should consider deposits up to 85 million KRW as small amounts and introduce special measures to prioritize their repayment." The idea is to adopt a system for prioritizing small deposit repayments to provide immediate relief. However, she noted that the criteria for small deposit repayment may vary by region, leaving fairness issues unresolved.

With the special law stalled, the ruling and opposition parties agreed to reschedule the subcommittee discussions through talks between their secretaries. As the subcommittee review remains deadlocked, the possibility of passing the bill at the plenary session in early May has become uncertain.

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