2 Million Won Becomes 3.1 Million the Next Day ... Illegal Lending Ring Charging '20,000% Annual Interest' Dismantled

An illegal private lending ring that lent money to people in urgent need at exorbitant annual interest rates of up to 20,000%, then threatened them and spread false information about them to family members and acquaintances when they could not repay on time, has been dismantled.

The Gyeongnam Provincial Police Agency's Metropolitan Crime Investigation Unit announced on October 15 that it had arrested all 16 members of the ring, including a man in his 30s identified as A, who allegedly led the operation, on suspicion of violating the Act on Registration of Credit Business, etc. and the Fair Debt Collection Practices Act, among other offenses. Ten of them have been detained.

Kim Wansun, chief of the 3rd Metropolitan Criminal Investigation Unit at the Gyeongnam Provincial Police Agency, is making an announcement about the arrest of an illegal lending organization. [Photo by Lee Seryeong]

According to police, the suspects allegedly engaged in illegal lending from February 2025 to September 2026, using a database of loan inquiries they had illegally obtained through online messengers such as Telegram.

A and the others advertised loans by sending mass text messages through overseas websites or direct messages (DMs) on social networking services (SNS) from burner phones, police found.

Most of the loans were small, ranging from 200,000 to 5 million won. However, the suspects set interest rates without any standards or principles, charging annual rates as high as 20,075%. In one case, they lent 2 million won, applied daily interest of 55%, and collected 3.1 million won.

During the loan process, they also obtained borrowers' photos, contact details for their family members and acquaintances, and account numbers, ostensibly as collateral.

Debt collection messages sent to victims by an illegal private lending organization. [Photo provided by Gyeongnam Provincial Police Agency]

When borrowers could not repay on time, the suspects spread false claims to their family members and acquaintances, saying things such as, "The borrower took out a loan to get an abortion and won't pay it back," and "They borrowed money by selling their acquaintances' personal information."

They also engaged in illegal debt collection by calling or texting borrowers and threatening to "deposit proceeds from voice phishing scams into your family members' bank accounts so they won't be able to use them."

The group is believed to have spent the money it earned illegally on luxury vehicles and entertainment.

Over a seven-month period, the group lent approximately 7.6 billion won to around 2,000 people and pocketed 2.5 billion won in illicit interest. Investigators found that 332 victims have so far been confirmed.

The victims were mostly people in their 20s and 30s at the start of their careers. Most had a history of borrowing and were unable to obtain loans from financial institutions.

Items seized by the Gyeongnam Provincial Police Agency at the scene of the arrest of an illegal private lending ring. [Photo provided by the Gyeongnam Provincial Police Agency]

After receiving intelligence about the case in July, police launched an investigation, arrested A and the other members of the ring, and seized 200 million won in cash and 26 mobile phones at the scene. One member who was overseas was apprehended as soon as he returned to South Korea, at the airport.

Police recently referred the suspects to the Changwon District Prosecutors' Office. They plan to add charges, including organizing a criminal group, against eight of the detained suspects based on evidence uncovered during the investigation.

Police will continue investigating the confiscation and recovery of proceeds to ensure that the group is deprived of all the criminal proceeds it concealed.

They also plan to analyze burner accounts and phones to identify additional victims and provide one-stop comprehensive support to them and the victims already identified, including referrals to the Credit Counseling and Recovery Service.

Kim Wansun, chief of the 3rd Metropolitan Crime Investigation Unit, said, "The Act on Registration of Credit Business was revised in July 2025, and debts from illegal private lending are effectively criminal debts that do not need to be repaid. If you have been victimized by illegal private lending, do not be afraid; please report it to the police."

He added, "Our police will work not only to arrest the perpetrators but also to protect and support victims. We will conduct intensive investigations into unregistered lending businesses and illegal debt collection rings that destroy people's lives and cause suffering, and root them out completely."

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