Kakao Pay under investigation for allegedly leaking 54 billion personal data entries to China's Alipay

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Kakao Pay under investigation for allegedly leaking 54 billion personal data entries to China's Alipay

Published: 05 Sep. 2024, 13:42 Updated: 05 Sep. 2024, 14:54

A concept photo depicting a data leak [GETTY IMAGES]

Police have opened an investigation into Korean mobile payment service Kakao Pay for allegedly allowing 54 billion instances of customers' personal data to be leaked to Chinese mobile payment service Alipay without their consent.

The Seoul Central District Prosecutors’ Office has transferred the case against Kakao Pay CEO Shin Won-keun and former CEO Ryu Young-joon, who are accused of violating the Credit Information Use and Protection Act, to the Seoul Suseo Police Precinct, police said Wednesday.

On Aug. 16, the civic group Freedom Korea National Defense Corps filed a complaint with the prosecutors' office against Kakao Pay for leaking customers' personal information without consent. The police plan to summon the representative of the civic group for questioning as a complainant on Monday, according to local media outlets.

"If there had been no investigation by the Financial Supervisory Service (FSS), the personal information of Korean citizens would have continued to be provided to the Chinese side without any protection," the complaint read.

The FSS said on Aug. 12 that an inspection of Kakao Pay's foreign exchange transactions from May to July found the company transferred the personal credit information of more than 40 million users to Alipay without consent.

Mobile payment service Kakao Pay [KAKAO PAY]

Kakao Pay released a statement the next day denying the allegations, stating that the process was a legitimate outsourcing of customer information to provide a payment method on Apple’s App Store.

Apple requires payment services seeking to join its app store to supply customer-related data.

“Unlike other foreign operators, Apple requires a higher level of fraud prevention processes,” Kakao Pay said. “To meet this requirement, Apple has long been collaborating with Alipay.”

Kakao Pay also cited Article 17, Paragraph 1 of the Credit Information Use and Protection Act, which states that consent from the data subject is not required when personal credit information is outsourced for processing. The company added that it had confirmed with Alipay that the information was not utilized for other purposes such as marketing.

BY KIM MIN-YOUNG [kim.minyoung5@joongang.co.kr]