Ads for easy loans to face more restrictions on television
Television advertisements that over-emphasize quick and easy loans will be banned in Korea starting in October.
The Financial Services Commission (FSC) announced Sunday tightened regulations on advertisements for money lending companies.
In addition to banning exaggerated ads, the commission said it will restrict the amount of air time for such ads by 30 percent in the latter half of the year. It will also limit the time slots in which the money lending businesses can broadcast their ads.
“There has been a rising number of cases in which money lenders promote their products with exaggerated ads amid intensifying competition within the industry,” an official from FSC said.
“Tightened policies were needed in order to eliminate such practices that can easily lure people into borrowing money and ending up with excessive debt,” the official added.
TV ads that have slogans emphasizing quick and easy loans will become illegal. So for example, TV ads that promise “10 million won [$8,830] will be in your hands within 30 minutes” or “Anybody can borrow one million won without receiving a consultation” will be banned from October. The ads will have to clearly state the downside of defaults, such as downgrades of personal credit ratings.
The air time of ads for money lending will be downsized by 30 percent by the end of the year. Consecutive ads from the same or different money lenders would be banned in prime time. From 10 p.m. to 11 p.m., it will not be allowed to air two loan-related advertisements in a row.
Regulations on outsourced workers who directly engage with potential borrowers will be tightened as well.
It will become illegal for such salespeople to promote loan products with high interest rates while not mentioning loans with lower interest rate.
Currently, there are some 12,000 outsourced workers doing marketing for some 110 financial companies. They receive a commission of 1 to 5 percent of the amount of loan and 0.2 to 2.4 percent commissions on mortgages. The commission wants the commissions to be publicized on the homepage of the companies.
BY JIN EUN-SOO [firstname.lastname@example.org]