Police launched a raid on the headquarters of Kakao Pay after the company provided the personal information of as many as 40 million customers to Alipay, a Chinese simple payment service, without consent.
According to police and others on the 9th, the anti-corruption and economic crimes unit of the Gyeonggi Nambu Provincial Police Agency conducted a two-day search and seizure from the 6th to the 7th at Kakao Pay's headquarters in Bundang-gu, Seongnam, on suspicion of violating the Credit Information Act and the Electronic Financial Transactions Act.
This was the first search and seizure of Kakao Pay since police opened an investigation in March at the request of the Financial Supervisory Service.
Police were said to have secured electronic data and other materials related to the entire decision-making process by which Kakao Pay agreed to provide personal information to Alipay.
After finishing the analysis of the seized materials, police plan to proceed with questioning witnesses and suspects. Those booked so far include Kakao Pay employees and the corporation, but the identities and number of the subjects have not been disclosed.
Kakao Pay is suspected of having handed over 54.2 billion pieces of personal information for about 40 million customers to Alipay from 2018 through May 2024.
Kakao Pay was found to have provided all user information to build the "NSF score" calculation model that Apple entrusted to Alipay. The NSF score is a type of customer-specific metric calculated to evaluate the likelihood of insufficient funds for payments by Apple service users.
The Personal Information Protection Commission imposed a penalty surcharge of 5.968 billion won on Kakao Pay in January last year, and the Financial Supervisory Service (FSS) in February also issued an institutional warning, a form of heavy discipline, and imposed a penalty surcharge of 12.976 billion won and fines of 4.8 million won.
Kakao Pay argued the data provision was lawful under business entrustment and filed an administrative suit against the Personal Information Protection Commission, but the court ruled against the plaintiff on the 11th of last month.
At the time, the court said, "It is difficult to find that the data subjects recognized or gave specific and clear consent to the fact that the information was used by Apple as a kind of credit evaluation indicator to assess customers' payment ability." Kakao Pay reportedly appealed.