One-Stop Support for Illegal Private Finance Halts 3,421 Collections in Six Months... Relief Applications Now Unified

645 Debt Settlements Reached
Support for Victims from Police Report to Investigation and Litigation

#A minor, identified as "A," borrowed 350,000 won from an illegal private lender found on Telegram in order to fund illegal gambling. The condition was to repay 700,000 won in one week, equivalent to an annual interest rate of about 5,214%. When the debt was not repaid, the lender illegally obtained and circulated photos of "A" and documents related to the loan among "A’s" friends using their contact information. Following a report filed by the parents, the Korea Credit Counseling & Recovery Service stepped in to provide one-stop support for damages from illegal private financing, demanding the settlement of the debt and the return of excessively collected funds. The case was also transferred to the Financial Supervisory Service, which was asked to request an investigation, appoint a debtor representative, issue a certificate confirming the invalidity of the loan contract, and freeze the relevant accounts.

Financial authorities are expanding one-stop support services for victims of illegal private finance, connecting the entire process from reporting damages to investigation and litigation. The core measure is to integrate the online reporting procedures into a single system and to link Credit Counseling & Recovery Service support from the police report stage, thereby reducing the burden on victims.

The Financial Services Commission announced on August 30 that it confirmed this plan to enhance the one-stop support system for victims of illegal private finance, following a meeting of the "Inclusive Finance Promotion Task Force" subcommittee on policy finance and the response task force for illegal private lenders held on August 28.

The one-stop support system for victims of illegal private finance is a system in which, when a damage report is filed, financial authorities request an investigation from the National Police Agency and demand that lenders cease collection activities, while also instructing financial institutions to freeze accounts related to illegal lending, thereby coordinating support for victim relief through cooperation among related agencies.

Starting August 31, victims will be able to apply for multiple relief measures -- including halting illegal collection, appointing a debtor representative, suspending the use of associated phone numbers, and requesting investigations -- in a single process via the Financial Supervisory Service’s official website. Previously, each relief measure required separate applications and repeated input of creditor information and loan/repayment records, but now a single report allows victims to apply for all necessary relief measures at once.

The process linking police reports to Credit Counseling & Recovery Service support has also been simplified. With consent from the victim, police on the scene can provide a QR code enabling instant access to the Credit Counseling & Recovery Service application, where victims can request counseling.

Support throughout the investigation and litigation process has also been strengthened. If the victim appoints the Credit Counseling & Recovery Service as their legal representative, a dedicated staff member will handle all steps of the investigation process, including reviewing and duplicating investigation materials, supplementing documentation, monitoring the investigation’s progress, and receiving notifications of results, all on behalf of the victim.

Once the police have identified the lender through their investigation, the Credit Counseling & Recovery Service also collaborates with the Korea Legal Aid Corporation to support lawsuits for invalidating the lending contract, returning unjust profits, and claiming damages to assist with recovery.

The Credit Counseling & Recovery Service’s one-stop support for illegal private finance, which is currently available only in person, will be expanded to an online service in October. After the online service is launched, victims will be able to supplement reports and use relief measures by communicating with an assigned representative via phone or text, without having to visit an integrated financial support center in person.

An official from the Financial Services Commission stated, "To ensure that the one-stop victim support service for illegal private finance functions as an effective protection channel, we will regularly monitor the operation in cooperation with related agencies, continuously improve the system, and strengthen publicity efforts so that no victims are left unserved due to a lack of information or awareness of the system."

Meanwhile, since the one-stop victim support service for illegal private finance was introduced at the end of February, approximately 821 individuals have received counseling from the Integrated Financial Support Centers over the past six months. Of these, 656 victims reported a total of 4,705 cases. The Credit Counseling & Recovery Service has halted 3,421 illegal collection attempts and brokered settlements for the conclusion of 645 debts. The Financial Supervisory Service has issued and notified invalidity certificates for 154 loan contracts and reported 895 lenders with confirmed criminal activity to the police for investigation.

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