"Need cash fast?" Online ads lure borrowers into usurious loans charging up to 18,000% a year

[Financial News] A group that targeted people in urgent need of cash through ads on internet portal sites, charging interest rates of up to 18,000% a year and carrying out illegal debt collection, has been handed over to prosecutors.
On the 10th, Seoul Mapo Police Station stated that it had arrested eight members of the group on suspicion of violating the Lending Business Act and the Debt Collection Act. Four of them, including the head of the operation, the overall manager, the call-center operator and the person in charge of collections, were referred to the prosecution in custody, while the other four were referred without detention.
According to the police, from 2021 until recently the suspects ran an illegal private lending business without registering with the competent authorities, recruiting about 600 victims through internet portal sites and other channels. They are accused of extending loans totaling about 1.7 billion won in 1,741 transactions and collecting around 840 million won in interest by applying rates ranging from at least 34% to as high as 18,250% per year.
The group set up an unregistered office and divided roles such as call-center consultations, in-person loan execution, and repayment management and collection, carrying out the scheme in an organized manner. They placed ads on loan brokerage platforms to lure victims and then met them in person to finalize the loans.
To evade investigative tracking, they used aliases, burner phones and bank accounts opened under borrowed names, and gave borrowers a business name different from the one actually used for the operation.
During illegal collection, they used a so-called "phone bomb" application that automatically makes hundreds of calls until the victim answers, in order to pressure them into repayment.
In particular, after a court dismissed a request for a detention warrant when they were first arrested last year, they rented a new office and continued the same type of criminal activity.
During searches, the police seized 160 million won in cash, loan contracts and account books. They have applied for a pre-indictment seizure to preserve the funds for confiscation and are proceeding with procedures to recover the criminal proceeds.
A police official said, "Non-face-to-face loans arranged over the internet can lead to high-interest borrowing and illegal debt collection," and added, "We will expand investigations into illegal private lending crimes that prey on vulnerable people."
425_sama@fnnews.com Choi Seung-han Reporter