Gov’t slaps ban on card marketing

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Gov’t slaps ban on card marketing

In the wake of massive leaks of consumers’ financial information, the government has banned Internet and telephone marketing of credit cards and related products by almost all financial services companies at least through March, the Financial Services Commission announced yesterday.

“Non face-to-face sales activities of financial companies will be banned from Jan. 27 through the end of March, but the ban could be extended,” said Koh Seung-beom, secretary-general of the FSC.

All financial companies - except for six online property insurers and one life insurer - are prohibited from marketing their products via telephone, email and text messaging.

The excluded companies are AIG, ACE, AXA, ERGO, The-K, Hicar and Lina. Although the seven insurers are exempted from the ban, they must be able to prove that they collect personal information of target customers according to the law.

If companies want to continue using offline loan marketers, they are required to show that their marketers operate legally.

Cardsurance sales by credit card companies also will be suspended, the commission said. Cardsurance refers to insurance products, usually life insurance, packaged with credit cards that are sold only by telephone.

All financial companies also must ensure that internal management of customers’ information complies with Financial Supervisory Service guidelines. Compliance with security guidelines and whether companies have records of incoming and outgoing information will be closely monitored, according to the FSS.

The FSS also said Friday it will block websites that allow payments using only card numbers and expiration dates. According to the agency, about 5,000 small businesses that run online payment systems on their homepages use such minimal information. Starting next month, they must ask consumers to confirm payments via automatic response service calls or SMS, the FSS said.

“The government will form a task force to track the latest information leaks and will not hesitate to revise the law to devise measures to prevent other incidents in the future,” Prime Minister Chung Hong-won said yesterday at a press conference.

“There needs to be a radical revision of the reckless current practice of taking out loans through short message service [SMS] and other means, which encourages illegal distribution of personal information,” said FSC Chairman Shin Je-yoon at a meeting yesterday morning.

Public fears of fraud and crimes involving the leaked personal information of more than 15 million members of KB Kookmin Card, Lotte Card and NH Card are on the rise as numerous news reports have cited leaked information used for underground transactions.

According to the FSS, as of noon yesterday, there had been more than 2.32 million cancellations and suspensions of credit cards and 2.9 million requests to reissue cards.

The JoongAng Ilbo found security card numbers necessary for online banking transactions and issuance of digital certificates have been leaked and are being traded among so-called card DB (database) brokers.

The newspaper communicated online with a broker who sells sets of personal information for 100,000 won ($92.55).

The anonymous broker sent the newspaper a sample information set for a commercial bank customer that included the person’s name, resident identification number, online banking user name, bank account number and password, and card numbers.

The bank confirmed the person was a customer, but denied direct involvement in the information leak.

Another broker told the JoongAng Ilbo, “Since the current mood is not so favorable, prices have gone up.”

Text messages disguised as being from the troubled credit card companies or credit rating agencies are also on the rise, according to the FSS.


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