57 Members of 'Mobile Phone Scam' Gang Arrested for Opening Phones Abroad Under Borrowers' Names...

Damage Amounting to Approximately 840 Million Won

A group was arrested by the police for opening the latest mobile phones under the names of loan applicants and then smuggling them overseas through stolen goods dealers. They were investigated for committing illegal financial crimes known as 'phone kkang,' a method of providing money by purchasing phones from loan applicants at low prices.

On the 23rd, the Financial Crime Investigation Unit of the Seoul Metropolitan Police Agency announced that from May until the end of last month, they arrested 57 members of an illegal private loan crime organization, including Mr. A (28, male), on charges of organizing, joining, and participating in a criminal group, fraud, violation of the Telecommunications Business Act, and violation of the Personal Information Protection Act. Flowchart of mobile phone fraud activation. /Provided by Seoul Metropolitan Police Agency

On the 23rd, the Financial Crime Investigation Unit of the Seoul Metropolitan Police Agency announced that they had apprehended 57 members of an illegal financial crime organization, including Mr. A (28, male), on charges of organizing, joining, and participating in a criminal group, fraud, violation of the Telecommunications Business Act, and violation of the Personal Information Protection Act. Among them, four, including Mr. A, were detained.

They are accused of, from June last year to August this year, opening high-priced latest mobile phones under the names of loan applicants and distributing them overseas through stolen goods dealers, engaging in what is called durable goods loans, or phone kkang. Phone kkang refers to illegal financial lending where a high-priced phone is opened as a condition to receive quick cash from illegal lenders in exchange for handing over the device. Although the loan applicant must pay the installment monthly, those who urgently need 500,000 to 1,000,000 KRW and cannot get loans through formal financial institutions resort to such illegal financial services.

According to the police investigation, Mr. A opened eight distribution stores in Gumi City, Gyeongbuk Province, and Daegu City around June last year and posted loan advertisements on several online loan platforms. When loan applicants contacted them after seeing the ads, call center counselors obtained the applicants' personal information, then accessed the mobile carrier’s system at pre-established phone stores to check the number and amount of phones that could be opened. They then opened the latest phones priced between 1.3 million and 2.5 million KRW under the loan applicants’ names with 2-3 year contracts and paid the applicants 400,000 to 1,000,000 KRW depending on the model. The phones were resold to stolen goods dealers.

The police traced the opening and distribution process of burner phones used in the 'Gangnam drug drink' case in April and other voice phishing crimes, which led them to clues about the phone kkang organization. Mr. A was found to have planned and executed the crimes by recruiting classmates and acquaintances based on his past experience working as an employee at a durable goods loan company. For the crimes, Mr. A established eight distribution stores, two mobile phone stores, two call centers, and one dormitory, and systematically committed the crimes by recruiting and training four counselors and 15 delivery drivers through a manager.

A total of 461 phones were used in this crime, with 297 name holders identified. Most of the name holders reportedly became credit delinquents due to failure to pay installments on time according to the contracts. The damage amount is estimated at about 840 million KRW based on market value at the time. The police confirmed that all 461 latest devices opened through durable goods loans were smuggled overseas through stolen goods dealers.

A police official said, "Durable goods loans are an illegal financial crime method that takes unfair profits by using the names of people who have difficulty obtaining loans through formal financial institutions due to economic hardship," adding, "We will continue to crack down on and investigate illegal financial crimes that threaten the livelihood of ordinary people."

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