Kakao Pay, which handed over the personal credit information of 40.45 million people to China's Alipay, was hit with heavy disciplinary action by the financial authorities.
On Feb. 6, the Financial Supervisory Service said it recently determined that Kakao Pay improperly provided personal credit information to a third party without customer consent and imposed heavy disciplinary action equivalent to an "institutional warning." It levied a 12.976 billion won penalty surcharge and 4.8 million won in fines. Two executives received measures equivalent to a warning and a cautionary warning, respectively, and three employees were given pay cuts and reprimands.
According to an FSS examination, from Aug. 27, 2018, to May 21, 2024, the company provided a total of 54.2 billion cases (cumulative 40.45 million people) of personal credit information to Alipay without customer consent. Because payment records for Pay Money used by customers at merchants were included, information and data on the content and performance of electronic financial transactions were also included.
The FSS found that Kakao Pay executives and employees failed to conduct checks on legal compliance and did not follow administrative security measures. Even after a credit information manager/protector was designated in Oct. 2020, 40.9 billion cases of personal credit information were provided.
In Jan. last year, the Personal Information Protection Commission also imposed a 5.968 billion won penalty surcharge and a corrective order on Kakao Pay over the same matter. In Apr. the same year, Kakao Pay filed an administrative lawsuit challenging the sanctions. The company argues it transferred the information in accordance with lawful procedures to prevent fraudulent transactions.