Banks Begin Discussions on No-Fault Compensation for Voice Phishing Victims... "Telecom Companies Must Be Included"

As the government prepares legislation requiring financial institutions to compensate victims of voice phishing scams for part or all of their losses, the financial sector has also begun serious discussions on the matter. Banks are arguing that telecommunications companies should be included as responsible parties for compensation.

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According to the financial sector on September 18, financial authorities and banks have begun discussions on the scope and method of compensation under the proposed strict liability system for voice phishing. On August 28, the government convened a pan-government voice phishing response task force and announced a "Comprehensive Plan to Eradicate Voice Phishing." The plan includes three major measures related to the financial sector: enacting strict liability for financial institutions and strengthening their response capabilities, establishing an integrated artificial intelligence (AI) platform to combat voice phishing, and preventing the abuse of virtual assets in voice phishing scams.

The most notable measure is the legislation of strict liability for compensation. Under this system, parties responsible for preventing voice phishing, such as financial institutions, would be required to compensate victims for part or all of their losses. This would provide substantial relief for victims and incentivize the advancement of abnormal transaction detection systems (FDS) for more proactive prevention. The plan also includes mandatory establishment of dedicated departments and deployment of specialized personnel for voice phishing prevention and response, as well as evaluation of financial institutions' response capabilities by the Financial Supervisory Service.

Yoon Changryul, Minister for Government Policy Coordination, is announcing a comprehensive plan to eradicate voice phishing at the Government Seoul Office in Jongno-gu, Seoul on the 28th. Representatives from the Ministry of Science and ICT, Ministry of Justice, Financial Services Commission, Prosecutor's Office, National Police Agency, Financial Supervisory Service, and Personal Information Protection Commission attended the announcement. August 28, 2025. Photo by Jo Yongjun

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Kim Taehun, Director of Financial Safety at the Financial Services Commission, stated at the "Policy Forum on Improving Voice Phishing Investigation and Victim Relief Systems" held on September 16 and hosted by Assemblyman Kim Yongmin of the Democratic Party of Korea and others, "Since this is an exception to the principle of fault-based liability and the conditions for introducing this system to secondary financial institutions must also be considered, it is necessary to gather sufficient feedback from the industry." He added, "We plan to pursue legislation by amending the Special Act on the Prevention of and Refund for Damages from Telecommunication Financial Fraud." He also mentioned that discussions are underway on the requirements, limits, and procedures for compensation, taking into account effective relief for consumers and the acceptability for financial institutions.

On September 4, team leaders from 23 banks gathered at the Korea Federation of Banks to exchange opinions on the strict liability compensation system for voice phishing. At this meeting, they shared the current situation and the initial draft from financial authorities, but did not discuss specific measures. The financial authorities have initially proposed a compensation limit of 15 million won and are currently seeking feedback from the banking sector.

A representative from a commercial bank stated, "It seems that the proposed amount is based on an analysis of the scale at which compensation would provide meaningful relief to consumers, but we do not know the exact background for determining the figure."

Some banks are already operating free voice phishing insurance programs. Woori Bank and Shinhan Bank, for example, pay insurance benefits of 10 million won and between 3 million to 20 million won, respectively, in the event of voice phishing damage. Since January last year, Shinhan Bank has also been providing voluntary compensation under its "Non-Face-to-Face Financial Accident Liability Sharing" system.

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The banking sector argues that telecommunications companies, in addition to banks, should be included as responsible parties for preventing voice phishing. A representative example is the proposal to add telecommunications companies as responsible parties for prevention under the Special Act on the Prevention of and Refund for Damages from Telecommunication Financial Fraud, alongside financial institutions. In the latest announcement of measures to eradicate voice phishing, the government only imposed primary management responsibility on telecommunications companies for illegal activations by agencies or sales outlets.

The banking sector also emphasized the need to refer to overseas examples such as Singapore. Since last year, Singapore has required financial institutions, telecommunications companies, and consumers to share responsibility for compensating losses from phishing scam transactions. Under the "waterfall approach," the institution with the highest level of responsibility-whether the bank, telecommunications company, or consumer-must provide full compensation if it is found to have violated its primary duty.

Another commercial bank representative commented, "While it is the bank's responsibility to detect illegal transfer processes or suspicious transaction patterns, it is the telecommunications company's responsibility to block illegal applications or information-gathering activities conducted via mobile phones. Therefore, telecommunications companies also bear responsibility." It is reported that the financial authorities fundamentally agree with the banking sector's argument and are currently consulting with the Ministry of Science and ICT on this matter.

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