Financial Authorities Launch Three-Month On-Site Inspection of 10 Loan Companies Targeting "Zombie Debt" Collection

Intensive Inspection of Illegal Debt Collection and Maximum Interest Rate Violations
Investigation into Connections with Illegal Private Financing
Joint Efforts with Gyeonggi Special Judicial Police Unit

Financial authorities will conduct a comprehensive three-month on-site inspection of loan companies and related entities to eradicate "predatory financial practices" targeting low-income and vulnerable groups, including illegal debt collection, violations of maximum interest rate regulations, and connections to illegal private financing.

The Financial Supervisory Service announced on June 7 that, starting from June 8 until August 28, it will carry out a thorough on-site inspection of approximately 10 loan companies and online loan brokerage platforms over a three-month period.

The inspection targets will be selected by comprehensively considering complaints and past inspection records, and three inspection teams will be organized for major areas of focus. Online loan brokerage platforms will be jointly inspected with the Gyeonggi Province Special Judicial Police Unit.

The Financial Supervisory Service plans to focus on identifying malicious illegal activities that deceive or hinder the economic recovery of low-income and vulnerable borrowers during this inspection.

First, the inspection will review illegal debt collection cases, such as so-called "zombie debt" collection and practices that pressure family members or acquaintances of debtors, leading to social stigma. It will also check for violations of the maximum interest rate regulation, such as bait loans under the pretext of creditworthiness screening or schemes that reduce principal but increase interest burdens.

In addition, the Financial Supervisory Service and the Special Judicial Police Unit of Gyeonggi Province will jointly focus on inspecting cases of illegal private financing connected to online loan brokerage platforms.

This measure comes as the number of loan company users has begun to rise again, amid difficulties for low-credit and low-income individuals and vulnerable groups in accessing primary financial institutions. Although the number of loan company users had been declining since the end of 2021, as of the end of June 2025, it increased by 9,000, marking a reversal to an upward trend for the first time in five years.

According to the Financial Supervisory Service, recent inspections of loan companies uncovered cases of exploiting debtors' lack of legal knowledge. Examples included creditors including litigation costs in the debt amount even after losing lawsuits against debtors, or demanding settlement payments by offering debt forgiveness for debts that are legally dischargeable.

An official from the Financial Supervisory Service stated, "If any violations are discovered, we will take strict action in accordance with relevant laws to establish sound market order in the lending sector. By cooperating with the Special Judicial Police Unit, we aim to eliminate blind spots between the supervision and inspection of registered loan companies and the investigation of illegal private financing crimes, and to establish a thorough protection system for low-income borrowers."

This content was produced with the assistance of AI translation services.