"No-document same-day loans, interest rates exceeding 20%, advance deposits = 100% fraud"... One-stop support for victims of financial and illegal private lending

[Financial News] As the need for cash increases ahead of the Chuseok holiday, illegal private lending is also rampant. Financial authorities have sounded a 'consumer alert' as crimes targeting certain vulnerable groups who are blocked from obtaining loans from mainstream financial institutions, such as banks, savings banks, and registered lending companies, have surged. The warning is to not be deceived by illegal loan advertisements that take advantage of the difficulty in accessing mainstream financial services.
On the 11th, financial authorities warned the public to be wary of illegal private lenders who approach people using phrases such as "same-day loans" or "no documents, no collateral" to induce them into taking out loans with ultra-high interest rates. They also advised that anyone who has taken out a loan and is subjected to illegal debt collection practices, such as threats against family or acquaintances, should report it immediately.
Since last March, the government has been operating the "Illegal Private Lending One-Stop Support System," which allows victims of illegal private lending to receive assistance ranging from the cessation of illegal debt collection to damage relief, through a single report. In August, user convenience was enhanced by establishing an integrated reporting window on the Financial Supervisory Service website and linking with police reports. Ahead of the upcoming Chuseok holiday, the Financial Services Commission (FSC) provided guidance on preventing damage from illegal private lending and how to use the One-Stop Support System.
To prevent damage, when you need urgent funds, you should first check the availability of government-backed microfinance products instead of resorting to illegal private lending. You can check for low-interest products, such as the Sunshine Loan, through the Korea Inclusive Finance Agency app. When using a lending company, you must verify its registration status through the 'Integrated Inquiry of Registered Lenders' on the Financial Supervisory Service website or by contacting its call center. All unregistered companies are illegal. If a company name, registration number, or address is not displayed in advertisements on social media or via text message, it is highly likely to be an illegal advertisement.
If interest exceeding 20% per annum is demanded, if advance payments such as fees, deposits, or upfront interest are required before the loan is executed, or if excessive personal information is requested—such as contact information of family or acquaintances, photos of identification, or photos of your body—you must immediately stop the loan and report it. Under the revised Money Lending Act, loan agreements with interest rates exceeding 60% per annum are null and void for both principal and interest, and you may demand the return of any amounts already repaid. Relevant materials, such as loan agreements, remittance and repayment records, and collection text messages or call recordings, should not be deleted but kept so that they can be used as evidence in the process of reporting damages and seeking relief.
If you are subjected to illegal debt collection, it is important to report it immediately rather than trying to handle it alone. Illegal private lenders tend to stop collection efforts when public institutions, such as the Financial Supervisory Service or the police, intervene, and through the one-stop support system, you can receive measures to halt collection starting from the day of the report.
Damages from illegal private lending can be reported online through the 'One-stop Damage Report for Illegal Private Lending' menu on the Financial Supervisory Service website, or by contacting the Credit Counseling and Recovery Service (CCRS) call center or visiting an Integrated Support Center for Low-Income Financial Services. Online reports can be submitted via the 'Complaints & Reports' menu on the Financial Supervisory Service website; supporting documents such as loan-related text messages, ChatGPT for Kakao conversations, deposit/withdrawal records, contact information of illegal lenders, and recordings of illegal debt collection must be attached. Reports can still be filed even if some supporting documents are missing.
For offline reporting, you can schedule a consultation by phone with the Credit Counseling and Recovery Service (CCRS) Call Center and then visit a nearby Integrated Support Center for Low-Income Financial Services; a dedicated staff member will handle both the consultation and the damage report. Support is available at 22 centers nationwide, and if the details of the damage or supporting documents are extensive, the staff member will assist in organizing them. Organizing your materials in advance can shorten the consultation time.
The Financial Services Commission (FSC) plans to cooperate with the financial sector and relevant agencies during the Chuseok holiday period to intensively provide guidance on preventive measures against illegal private lending and reporting channels. For reports received during the holiday, dedicated personnel will be promptly assigned to connect them with victim relief systems.
"A financial authority official stated, 'Loan contracts with an annual interest rate exceeding 60% are null and void for both the principal and interest.' He added, 'If you need quick cash, look into government policy products, and if you are being subjected to illegal debt collection, do not suffer alone; report it immediately to nullify the principal and interest.'"

[email protected] Park Mun-su Reporter