Annual Interest Rates Up to 43,800%: Nine Members of Illegal Lending Syndicate Referred to Prosecution

Advertised as a Legitimate Lender, Pocketed 200 Million KRW

"Ultra-High-Interest Private Loans Are a Crime, Not a Financial Service"

An illegal private loan organization that issued ultra-high-interest loans with annual rates reaching up to 43,800% and obtained an illicit profit of 200 million KRW has been handed over to the prosecution.

The Seoul Metropolitan Police Agency's Metropolitan Crime Investigation Unit announced on the 9th that it had arrested and referred to the prosecution three people, including Mr. A, age 28, the ringleader, and two core members of the sales team, on charges of violating the Loan Business Act. Four other sales team members, a call center employee, and a remittance handler—six individuals in total—were referred without detention.

Text message content showing the criminal method of an illegal private loan gang that lent 300 million won to 46 victims exceeding the legal interest rate limit (20% per annum) from April 2022 to March last year, then received 500 million won, making a profit of about 200 million won. Seoul Metropolitan Police Agency

According to the police, from April 2022 to March last year, Mr. A and others are suspected of lending a total of 300 million KRW to 46 victims at interest rates exceeding the legal limit (annual 20%), then collecting 500 million KRW in repayments and making a profit of about 200 million KRW. The average interest rate paid by the victims reached 2,400% per year.

They posted advertisements on online loan brokerage platforms to appear as legitimate lenders and collected contact information from individuals in urgent need of cash. They then lured victims to their own unregistered company and proceeded with illegal lending.

They demanded victims submit verification photos holding handwritten loan agreements and provide contact information for 10 family members or acquaintances. They lent small amounts ranging from 300,000 to 1.5 million KRW and required repayment of principal and interest in two weeks. If the victim failed to repay on time, they charged a daily "extension fee" of 50,000 KRW, thus collecting exorbitant interest. In one case, victim B (age 47) borrowed 250,000 KRW for just one day but was required to repay 550,000 KRW the next day—effectively paying 120% of the principal as interest in a single day, which translates to an annual interest rate of 43,800%.

The group was found to be composed entirely of individuals in their twenties. Under the ringleader, they divided roles such as sales team, call center staff, and remittance handler to conduct their crimes. For victims unable to repay, they threatened to disclose the loan to people around them and pressed for repayment. The sales team pressured victims by threatening to send their verification photos with loan agreements to family and acquaintances via social media. For six victims struggling to repay, they coerced account information under the guise of reducing interest and used it in further crimes.

The police completed a pre-indictment preservation order for the entire illicit profit of 200 million KRW. A police official stated, "Unregistered companies and ultra-high-interest private loans targeting financially marginalized people in need of emergency funds are not financial services but crimes," and urged the public to report illegal private loan activities actively if victimized.

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