As illegal private lending disguised as normal transactions increases, cases are emerging in which victims are instead being sued as fraud suspects by illegal private lending companies.
Victim A used an annual interest rate reaching 3,200% and, when unable to repay, was sued for fraud by the company. The Daegu Prosecution Service, after an investigation, found that the company had repeatedly filed similar complaints against other debtors and determined that fraud did not apply.
Illegal private lending companies that offer gift certificate loans are trying to make them look like normal transactions between individuals. However, with a recent precedent holding that whether it is a lending business should be judged by the transaction structure rather than the counterparty, the situation appears likely to improve.
An official at the Busan Metropolitan Police Agency said, "Previously, there was no clear concept of gift certificate usury. We secured a ruling that any form of transaction that sets a term and takes high interest according to that term all falls under the lending business."
Attorney Kim Byeong-guk at Beonhwa Law Office added, "If you can prove who proposed the gift certificate transaction and the difference between the amount actually received and the amount to be repaid, you can be recognized as a victim of illegal private lending," and "you can countersue the party who filed the fraud complaint for false accusation."
A victim sued by an illegal private lending company has to endure inconvenience until receiving a no-suspicion disposition. Another victim, B, after being sued for fraud, had an account under their name registered as a suspected fraud account and faced difficulties in normal financial transactions. It took about two months from the date the fraud was reported for B to receive a non-referral disposition.
If you are exposed to illegal private lending damage, you can report it to the Financial Supervisory Service (1332) to receive necessary assistance, and if you are struggling with excessive debt, you can get help from the Korea INclusive Finance Agency (KINFA) (1397) or the Credit Counseling & Recovery Service (CCRS) (1600-5500).
※ Lending contracts with an annual rate over 60% render both principal and interest invalid.