FSS Strengthens Consumer Protection System Inspection... Blocks Illegal Private Loan Ads with AI (Comprehensive)

Kim Mi-young, Director of the Financial Consumer Protection Department (Deputy Governor) at the Financial Supervisory Service (FSS), announced on the 8th that starting at the end of this month, measures will be implemented to identify illegal online private loan advertisements using artificial intelligence (AI) methods.

After holding a meeting with Chief Consumer Protection Officers (CCOs) from various financial companies including banks, savings banks, insurance companies, securities firms, and card companies on the morning of the same day, Kim briefed the press corps, stating, "There are limitations to the existing keyword extraction system, so we are developing a machine learning method to actively block such advertisements."

According to Deputy Governor Kim, damages related to illegal private loans have increased by 46% compared to the previous year as of the 2nd of this month. The FSS believes that blocking illegal private loan advertisements is essential to prevent such damages. Regarding virtual asset-related damages, the FSS plans to actively analyze damage patterns and cooperate with investigative agencies, issuing warnings promptly when consumer damage concerns arise.

The FSS plans to make a full-scale response to financial crimes targeting vulnerable groups. To this end, a "Special Period for Eradicating Illegal Private Loans" will be operated until October this year, and a "Virtual Asset-Linked Investment Fraud Reporting Center" will be established to strictly respond to coin-related investment fraud. Additionally, an indicator to evaluate financial companies' voluntary efforts to reduce voice phishing will be developed.

Meanwhile, on the same day, Deputy Governor Kim stated that efforts will be focused on establishing a "consumer-centered" culture across all financial company operations, including strengthening the inspection of consumer protection systems. The FSS has selected five key tasks: ▲ strengthening the inspection of the practical operation of consumer protection systems ▲ full-scale response to illegal private loans and other livelihood financial crimes ▲ enhancing preventive activities to reduce financial disputes ▲ strengthening consumer protection in response to digital transformation ▲ enhancing financial consumer capabilities and supporting rational financial life.

Regarding financial companies' consumer protection systems, Deputy Governor Kim said, "Although the duty to explain has been significantly strengthened, there are criticisms that it is being used as a means for financial companies to exempt themselves from liability," adding, "We will promote institutional improvements to create a consumer-friendly explanation environment in cooperation with the Financial Services Commission and the industry."

To this end, during consumer protection performance evaluations, the FSS will focus on checking whether consumer protection devices necessary for compliance with the Financial Consumer Protection Act are functioning properly and will encourage improvements. Deputy Governor Kim stated, "The duty to explain under the Financial Consumer Protection Act focuses more on obtaining a 'signature' than on whether the consumer understands," and added, "We will create a consumer-friendly product explanation environment." He also mentioned that the FSS will timely share complaint and sales analysis information from the Consumer Protection Department to reflect it in supervision and inspection tasks, and jointly conduct board or executive interviews and on-site inspections related to consumer protection.

Deputy Governor Kim also announced plans to strengthen consumer protection related to digital transformation. The FSS will examine whether deposit and loan brokerage platforms meet algorithm requirements that align with consumer interests and whether their terms of use are appropriately drafted. Furthermore, the FSS plans to enhance preventive measures to reduce financial disputes and encourage the development of win-win financial products by selecting best practices and posting them on the FSS website.

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