A random $100 payment isn't all good news, scam victims find

Social Affairs

Published: 07 Jan. 2024, 18:43 Updated: 07 Jan. 2024, 19:35

A random $100 payment isn't all good news, scam victims find

Ahn, 24, received 600,000 won ($450) from an unknown sender, which resulted in the suspension of his bank accounts. [AHN, JOONGANG PHOTO]

A growing number of scammers are using swindled money from phishing victims to wire to unrelated third parties, freezing their bank accounts.

The scammers transfer extorted money, usually 100,000 won to 200,000 won ($75 to $150), to a target bank account.

Once the funds reach the recipient’s bank account and the phishing victim reports the fraud, all accounts under the recipient’s name become inaccessible.

The scamming technique abuses the financial protection system and disables the unwitting recipients from accessing to their assets once their accounts are reported for having received the funds.

In this scheme, innocent third parties have to deal with the consequences of unwillingly receiving money.

A 24-year-old college student surnamed Ahn was left unable to access his bank account or savings after a total of 600,000 won ($450) was wired to his account. All functions on his mobile banking application were also disabled.

“With all of my access denied, I cannot pay back my loan interest or taxes, all of which are now overdue,” he said. Nowadays, Ahn only eats one meal a day because he ran out of cash.

A banker in his 30s also fell victim to the scam, and after receiving 200,000 won, his bank accounts were frozen. He was able to unfreeze them after managing to return the money to the phishing victim that originally owned the 200,000 won.

“Including myself, even people with financial knowledge can be left helpless. Ordinary people [who get scammed] will find it more difficult to solve the situation,” the banker said. He added that he never expected that he would ever be involved in such a financial crime.

The victims whose accounts are frozen have to reach out to the phishing victim through the mediation of a bank. But in many cases, the phishing victims refuse to get in touch with the money recipients because they fear it may be another scam.

In that case, the fund receivers should seek damage relief through the Financial Supervisory Service (FSS), which could take up to three months.

There are currently no statistics being gathered on this type of crime. The financial authority can only estimate its numbers now based on the total cases of frozen accounts that were also associated with fraud and phishing cases.

According to the FSS, the number of accounts that were frozen have been rising since 2020, in which it was 20,191, to 26,321 in 2021 and 33,897 in 2022. During the first half of last year, some 18,000 accounts had been suspended.

A scammer operates and promotes their business on Telegram, saying in the messages above that they can freeze peoples' bank accounts for their clients' personal vendetta. [SCREEN CAPTURE, JOONGANG PHOTO]

The scammers get paid with cryptocurrency from their clients via messaging services like Telegram. The clients request the freezing of accounts or other unlawful misconduct for their own personal vendetta or to interfere with rival businesses.

Popular YouTubers, ordinary people like Ahn and financial professionals alike can all become targets of this emerging crime.

One scammer who operates his business on Telegram told the JoongAng Ilbo that their client paid 300,000 won worth of bitcoin for a single case.

This emerging form of crime business is more profitable than conventional voice phishing schemes because scammers do not need to pay commission fees to money launderers and they can avoid the risk of launderers going off the grid.

The problem remains that it is difficult for victims to figure out the motive and who is behind the crime.

Lee Ki-dong, head of the Korea Financial Crime Research Center, has helped several victims of loan sharks but suffered from the same crime scheme himself last November.

It took him a week to get his accounts back to normal.

“I must have earned some enmity during my turbulent encounters with loan sharks,” Lee said.

“Once you are blocked from accessing your bank accounts, police and banks suspect that you are a voice phishing scammer. As the number of victims whose accounts are being suspended increases, the authorities should come up with measures to crack down on those illegal activities.”

The victim of the bank-account freezing crime received 200,000 won five times, three of which were all on one day. [JOONGANG PHOTO]

Scams are quickly evolving.

The scammers demand money or goods from victims whose bank accounts are frozen, saying they can lift the account restriction if they receive a ransom. Their targets are often self-employed people and online illegal gamblers, both of whom have a regular daily cash flow in their bank accounts.

Last June, the Incheon Court sentenced the head of a criminal enterprise to eight years in prison for extorting 1.2 billion won through coordination with a China-based voice phishing group. The group targeted online gamblers.

A bill to prevent such crimes is now pending at the National Assembly.

The bill would mandate that financial institutions allow the recipients of the illegally sent funds to withdraw or access their original savings while only restricting access to the amount of the received funds.

Proposed by People Power Party lawmaker Yun Chang-hyun, the bill passed the National Policy Committee in mid-December and now awaits final approval from the Legislation and Judiciary Committee.

“These new malicious crimes put victims in an antagonistic relationship,” Yun said. He said he will try to pass the bill before the end of his term.

Law enforcement authorities, however, are calling for more extensive measures. They point out that financial institutions should suspend accounts for various financial fraud crimes, including romantic dating scams.

“The police asked the bank to deactivate the account registered under the foreign dating scammer by sending an official document, but the bank rejected it,” a police official said. “Police had to just sit and watch while hundreds of millions of Korean won was going to the scammer.”

BY LEE YOUNG-KEUN, LEE SOO-JUNG [lee.soojung1@joongang.co.kr]