Fraudsters target internet-only bank customers

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Fraudsters target internet-only bank customers

Scams connected to internet-only banks are on the rise, as fraudsters adapt their approach to take advantage of the new, popular online services.

A user of Kakao Bank in Busan lost 150 billion won ($133.7 million) via a voice phishing scam last month after the scammer, who posed as a Kakao Bank counselor in a text, tricked the user into sending the money.

The fraudster told the victim that the 150 billion won needed to be sent to an account in order to increase the user’s credit rating to secure a loan that they had previously contacted Kakao Bank about.

A day before the scam took place, the victim contacted the exclusively online bank for advice on a possible loan. It was this sequence of events that gave the fraudster the opportunity to trick the victim without them becoming suspicious.

After transferring money to the account, the victim was not able to get in touch with the scammer, and the mobile phone number had been discontinued.

Busan’s Gangseo Police are tracking the account number to arrest the culprit behind the scam.

This is not the first time Kakao Bank users have fallen victim to fraud.

Around ten reports of identity theft were filed in August after users found that small loans were taken out without their consent.

Most of the incidents were between family members or relatives taking advantage of security loopholes at the digital bank.

In order to register and apply for a loan, all that is needed is somebody’s smartphone and state-issued ID cards, making it fairly simple for someone to fraudulently use their friends or family members’ details.

Kakao Bank said that the company is considering a tougher authentication process.

In the case of K Bank, it requires subscribers to make a video call with the bank while holding their ID cards as an extra level of verification.

In response to the rise in incidents of fraud, the financial authorities launched an on-site inspection on Aug. 28 at the country’s two internet banks - Kakao Bank and K Bank.

Both banks are technically exempt from regular inspections from the Financial Supervisory Service in the first three years, but the financial watchdog made the unusual move amid different complaints and issues at the new banks.

“To protect themselves, consumers are advised to be highly suspicious when receiving messages directing them to call and provide private information,” a spokesperson at the watchdog said.

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