[Voice Phishing Expos?] Flood of Prevention Measures, But the Road Ahead Is Long

Police Request Suspension of Phone Numbers Used in Crimes
But Only 55% of Cases Addressed

Intent to Improve Through Simplified Procedures
Decrease in Last Year's Damage Cases and Amounts
Refund Rate of Damages Rises to 48%

"Technical Limits to Blocking Voice Phishing"
"Main Perpetrators Must Be Arrested in Cooperation with China and Others"

[Asia Economy Reporters Lee Gwan-joo and Yoo Byung-don] ‘1.9 billion won’

This is not a lottery jackpot. Based on last year’s data, this is the amount lost to voice phishing in just one day. Although the police and financial authorities have introduced various measures and citizens are well aware of voice phishing warnings, finding a fundamental solution remains difficult.

The National Police Agency is working to prevent voice phishing by requesting the suspension of phone numbers used in crimes to prevent recurrence. However, questions remain about the effectiveness of these measures. From January to August last year, the number of phone number suspensions was 11,665, accounting for only 55% of all voice phishing cases. Registration in the voice phishing tracking system is also low. Although there were 34,132 and 37,667 voice phishing cases in 2018 and 2019 respectively, the police registered only 3,385 and 5,659 cases.

It is fortunate that the police show a willingness to improve the system. The National Police Agency established a separate telecommunications financial fraud investigation office and improved the phone number suspension procedure. Previously, the process required two steps of official document handling from ‘police station → provincial police agency → National Police Agency,’ but this was simplified to a one-step process ‘police station → National Police Agency’ via the KICS computer network. Additionally, they signed a business agreement with the spam blocking app operator ‘WhoWho & Company’ to notify 8.5 million app users of suspected phone financial fraud numbers.

The government also prepared a joint voice phishing eradication plan with related ministries and agencies. The core of the plan is to hold financial companies liable for compensation if they fail to verify identity during financial transactions or fail to suspend payments despite receiving information from investigative agencies or the Financial Supervisory Service (FSS) or legitimate damage relief requests. This reflects the judgment that it is difficult to limit responsibility for voice phishing solely to individuals.

The results of these proactive measures are positive. Last year, both the number of voice phishing cases and the amount lost decreased, and the refund rate of damages reached an all-time high. According to the Financial Supervisory Service, the number of damage relief applications related to voice phishing last year was 25,659, about one-third of the 72,488 cases in 2019. The amount lost decreased from 672 billion won in 2019 to 235.3 billion won. Notably, the refund rate, which hovered around 20% from 2016 to 2019, reached a record high of 48.5%.

Experts explain that there is still a long way to go. Professor Lim Jong-in of Korea University Graduate School of Information Security said, “Voice phishing crimes are evolving daily with various methods, so it is impossible and meaningless to block or prevent them technically.” He added, “Unlike in the past, criminal proceeds can now be converted into virtual currency and sent, making tracking difficult, and various conditions create a very favorable environment for voice phishing gangs.” Professor Lim emphasized, “The only way to eradicate the crime is to cooperate with governments of countries like China and Vietnam, which are major bases for voice phishing organizations, to arrest the ringleaders.”

Experts also say that the government’s policy to impose compensation liability on financial companies for voice phishing is not a realistic alternative. Professor Kwak Dae-kyung of Dongguk University’s Department of Police Administration pointed out, “Compensation can be forced if financial institutions are at fault due to negligence in management, but that would require changing the law,” and added, “Financial compensation is practically difficult.” Professor Kwak said, “There needs to be a consensus in our society and ongoing discussions on ways to reduce damage, but so far, this has been insufficient.” He continued, “A government-level atmosphere that shares responsibility for voice phishing damage must be created for institutional improvements to become more active.”