Sentencing Commission Sets Maximum 5-Year Term for Illegal Private Lending; "Manipulated Images" Bring Harsher Penalties

For Interest Rate Limit Violations, Aggravated Sentences Carry “Up to 3 Years and 6 Months in Prison”
Especially Egregious Offenses Face 1.5 Times the Sentence... Exceeding the 5-Year Statutory Maximum

Sentencing guidelines for crimes involving the receipt of interest exceeding the statutory maximum interest rate will be significantly strengthened. Penalties will also be increased for particularly egregious illegal debt-collection practices, such as threatening the safety of a debtor's family or using manipulated images.

The Supreme Court Sentencing Commission held a plenary meeting on November 6 to review proposed revisions to sentencing guidelines for offenses under the Act on Registration of Loan Business, etc. and the Fair Debt Collection Practices Act, the Supreme Court announced on November 9. The revisions reflect factors including the higher statutory penalties introduced by amendments to the Act on Registration of Loan Business, etc. last year and the need to protect vulnerable groups. Sentencing guidelines serve as a reference for judges when determining sentences.

Under the proposal, the recommended sentencing range for crimes such as operating an illegal private lending business is 10 months to 2 years and 6 months in the basic category, and 1 year and 6 months to 5 years in the aggravated category. For crimes involving the receipt of interest above the statutory maximum rate, the range will increase to 6 months to 1 year and 6 months in the basic category, and 10 months to 3 years and 6 months in the aggravated category. This follows last year's legal amendments, which raised the maximum statutory sentence for operating an illegal private lending business from 5 years to 10 years, and for violating interest rate limits from 3 years to 5 years. The sentencing range for receiving brokerage fees will remain unchanged.

The category of “repeated visits or visits at night” for violations of the Fair Debt Collection Practices Act will be expanded to include “demanding that a third party other than the debtor repay the debt on the debtor's behalf, or disclosing the debt at the debtor's workplace.”

Sentencing guidelines for illegal debt collection will also be revised. A new special aggravating factor will cover cases in which illegal collection causes victims difficult-to-repair harm, such as having to move, change jobs, resign, or take a leave of absence from school, or experiencing job loss, family breakdown, or a suicide attempt. Carrying a weapon, posing as a member of an organized crime group while disclosing a criminal record, threatening the safety of a debtor's family, and using manipulated images or forged documents in debt collection will also be included under “particularly egregious methods of committing the offense.”

For receiving brokerage fees and violating interest rate limits, a new general mitigating factor will apply when the victim does not wish to see the offender punished or the victim's losses have been substantially restored. A new special mitigating factor will also apply when the offender was only vaguely aware of the possibility of causing harm, such as making the victim feel fear or anxiety during debt collection.

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