"Debt Collection Even to Daughter's Kindergarten Teacher"... Illegal Private Loan Victims Surge

Damage from Illegal Debt Collection Surges Fivefold in Four Years

As of October last year, the number of consultations and reports related to illegal private loans surged to the highest level in the past five years.

According to data submitted by the Financial Supervisory Service (FSS) to Seo Beom-su, a member of the National Assembly’s Land, Infrastructure and Transport Committee from the People Power Party, the number of consultations and reports received by the FSS Illegal Private Loan Damage Reporting Center from January to October last year was 12,398, a 9.9% increase compared to 11,278 during the same period the previous year.

During the same period, the figures were ▲6,615 in 2020 ▲8,213 in 2021 ▲8,947 in 2022, showing a significant increase and marking the highest in the past five years. On an annual basis, the number of consultations and reports related to illegal private loan damages has continued to rise: ▲8,043 in 2020 ▲9,918 in 2021 ▲10,913 in 2022 ▲13,751 in 2023.

By type, unregistered illegal lending companies accounted for the largest number with 5,604 cases. Other categories included debt collection with 2,429 cases, high interest rates with 1,868 cases, illegal advertising with 1,390 cases, illegal fees with 584 cases, and fraudulent fundraising with 523 cases. In particular, the number of consultations and reports related to debt collection increased sharply by 49.8% compared to 1,621 cases during the same period last year. Furthermore, the number of debt collection-related consultations and reports has surged over the years as follows: ▲479 in 2020 ▲746 in 2021 ▲892 in 2022 ▲1,621 in 2023 ▲2,429 in 2024. The aggressive debt collection methods have caused the number of damage consultations to increase fivefold in four years.

Notably, in September last year, there was a tragic case where a single mother in her 30s, raising her kindergarten-aged daughter alone, was driven to suicide after suffering from illegal debt collection that even targeted her daughter’s kindergarten teacher.

The lawmaker’s office analyzed that as the economic downturn worsens, the difficulties faced by low-income and vulnerable groups deepen, leading to sustained demand for livelihood funds. However, the loan thresholds of institutional financial sectors, including lending companies, have risen, pushing more people toward illegal private loans. The delinquency rate of large lending companies soared to 13.1% in the first half of this year, reaching an all-time high.

According to a survey conducted by the Korea Inclusive Finance Agency in February last year targeting 1,317 users of lending and illegal private finance, the proportion of those who applied for loans from lending companies and were rejected was 74.1%, a significant increase compared to 68% in 2022. The agency explained that an estimated 48,000 to 83,000 people in the bottom 10% of personal credit scores moved to illegal private loans in 2023, an increase of up to 44,000 compared to 2022.

While the number of damage consultations and reports is rapidly increasing, the number of investigation requests made by the FSS decreased to 358 cases as of October last year, compared to ▲531 in 2021 ▲389 in 2022 ▲455 in 2023 during the same period.

Assemblyman Seo Beom-su stated, "Illegal private loans and voice phishing are especially rampant around the Lunar New Year when the demand for funds among low-income and vulnerable groups surges, so special caution is necessary." He emphasized, "The government needs to strengthen investigative personnel related to illegal private loans and consider designating the period before and after holidays as a special eradication period for illegal private loans, operating it regularly."

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