Low-rate loan scams on the rise, FSS reports

Home > Business > Finance

print dictionary print

Low-rate loan scams on the rise, FSS reports


In the midst of the Korean central bank’s repeated rate cuts, there have been increasing incidents of fraud involving cut-rate loans that target people with poor credit ratings.

According to the Financial Supervisory Service (FSS), the number of loan scams reported in the first quarter stood at 6,046, an increase of 16.7 percent year-on-year.

In the scams, victims were offered low-interest loans if they paid certain fees, and some even required personal information.

“Although there were many previous loan scams, the latest cases show that scammers attracted victims using a low-interest loan program,” said an FSS official. “Unlike the typical voice phishing scam, the new loan scammers required a relatively small sum of money as a commission to help victims get a low-rate loan.”


Scammers mostly pretended they were employees of a variety of legitimate organizations, such as banks, consumer finance companies, small private lenders or government-run organizations, victims told the FSS.

About 35 percent of the scammers said they were working for a consumer finance company, followed by 21.4 percent for savings banks and 11.9 percent for commercial banks.

According to the FSS, in February a victim received a call from a scammer saying he was the manager at a local consumer finance company and he would help the victim get a loan with a low rate of interest.

Suspecting the call could be voice phishing, the victim checked the official telephone number of the company’s headquarters and sent 1.7 million won ($1,519) as a commission to the scammer.

“Many scammers manipulate incoming telephone numbers that appear on the cell phones of victims,” said the FSS official. “By checking the numbers, victims believed the scammers were working at a legitimate organization.”

One frequently used organization by scammers was the Korea Asset Management Corporation, a state-run agency in charge of supporting debtors with poor credit ratings and offering them loans.

In March, a scammer identified himself as an official at a government body offering loans for people with bad credit and asked the victim to send 1.8 million won as a commission.

Some victims even sent copies of their bank accounts, credit cards or ID cards to the scammers, who told them they were needed to verify their financial transactions in order to get a loan.

As soon as they received the documents, the scammers ended their connection with the victims, who later discovered their accounts had been used for illegal transactions by someone else.

“Some scammers said people with poor credit ratings should seek a guarantee from a lawyer to get a loan and asked them to pay commissions for the service,” said the FSS official. “Although that sounds like it would never work, many people don’t know that they don’t need such a guarantee service to receive a loan.”

Financial fraud, including voice phishing, is rampant not only in Korea, but also in Japan, China and the United States.

According to data compiled by FSS, the number of victims in voice phishing cases in Japan was 11,257 in 2014, and the total amount of money lost by victims of the scams reached 37.6 billion yen ($304 million).

Chinese authorities estimate the number of reported voice-phishing cases in 2014 was 510,000 and the total amount of losses was 21.2 billion yuan ($3.42 billion), according to the FSS.

In the United States, there is a new victim of identity fraud reported every two seconds and 7.5 percent of all American households have been victimized by voice phishing.

In Japan, one of the variations on financial fraud is that scammers don’t ask for any money to be transferred to their bank accounts; rather they ask for it through a face-to-face meeting. Pretending to be a relative, they said they would send someone to the victim’s house to pick up the money.

Phishing through a face-to-face meeting is also increasing in Korea, according to the FSS.

A scammer disguised himself as a FSS official and called an elderly person living alone to tell him his personal information had been leaked and he should withdraw all of the money from his bank account.

Surprised by the trick, the elderly man did just that and the scammer visited his house and said he would keep his money for him.

“Given the fact that face-to-face phishing was previously pervasive in Japan, we suspect the new tricks were leaked into Korea recently,” said a senior FSS official. “However, those tricks don’t seem to work in the United States, as voice phishing is not rampant there, where the problem is more related to identity fraud.

“We assume various phishing tricks are effectively shared among the three neighboring countries - Korea, Japan and China - based on similar cultural backgrounds and sentiment,” he said.

BY KIM HEE-JIN [kim.heejin@joongang.co.kr]
Log in to Twitter or Facebook account to connect
with the Korea JoongAng Daily
help-image Social comment?
lock icon

To write comments, please log in to one of the accounts.

Standards Board Policy (0/250자)

What’s Popular Now