Police Bust Illegal Private Lending Ring Charging 1,500% Annual Interest

National Police Agency Selects Recipients of 5th Special Performance Reward

Police officers who achieved remarkable results, such as arresting a new type of illegal private lender who disguised deals as mobile department store gift certificate transactions and extracted ultra-high annual interest rates of up to 1,500%, will receive awards.

The National Police Agency announced on the 11th that it had held the 5th Special Performance Reward Deliberation Committee and selected 24 cases and awardees, with a total prize money of 207 million won. Among the notable cases, the Integrated Investigation Team 4 of the Dongnae Police Station in Busan, led by Inspector Kim Beomsoo, was recognized for arresting an illegal private lender who imposed annual interest rates exceeding 1,500% on financially vulnerable groups, such as individuals with low credit scores and young adults just starting out in society. The team will receive a reward of 15 million won.

Seodaemun-gu Police Agency, Seoul. Photo by Hyunmin Kim

The suspect in this case pretended to conduct legitimate transactions of mobile department store gift certificates through a Naver online community. However, in reality, the suspect supplied gift certificates to victims in urgent need of cash and required repayment in a short period, thereby engaging in illegal private lending. There were more than 300 confirmed victims, and the lending activity totaled 1,026 transactions. Notably, the perpetrators exploited a Supreme Court precedent stating that the repayment of securities does not constitute a monetary loan, disguising the high-interest loans as gift certificate transactions. The police determined that they drove debtors who could not repay into a corner by filing lawsuits against them.

The breakthrough began with a small suspicion from an investigator. The officer in charge explained, "Department store gift certificates can usually be converted to cash at around 97% of their face value, so I was curious why a 300,000 won gift certificate was being sold for 200,000 won in an online community. Moreover, the contract structure, where the gift certificate was transferred only after a set period rather than immediately after the sale, suggested that this might not be a simple gift certificate transaction."

The investigation team persuaded victims by carefully explaining the key issues in each case, and, based on the testimonies they managed to secure, was able to prove that the transaction in question was, in fact, illegal private lending. The investigator emphasized, "Any illegal private lending contract with an annual interest rate exceeding 60% is fundamentally invalid, and the debtor has no obligation to repay. We will continue to pursue and respond strictly to illegal private lending operations targeting financially vulnerable people."

The reward money was distributed not only for achievements in the area of strict response to illegal private lending, but also for outstanding performance in areas with high public impact, including: ▲protecting public safety and lives ▲arresting those spreading false or manipulated information (secondary victimization and public threats) ▲real estate crime ▲corruption and irregularities ▲arresting major criminals (serial arson) ▲phishing prevention ▲apprehending digital sex crime and cybercrime offenders, among others.

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