If You Receive Loan Solicitation Texts from Banks, It's Likely a Scam... Beware of Smishing

Rapid Increase in Large Loans and Government Loan Smishing
Clever Evolution Fueled by the COVID-19 Situation

[Asia Economy Reporter Kiho Sung] As COVID-19 prolongs, government support or low-interest refinancing loan text message financial scams (smishing) are rampant. Small business owners in urgent need of funds, especially due to the extension of social distancing, are becoming targets. Recently, the scams have evolved repeatedly, even including notices such as 'Compliance Officer Preliminary Review Required.' Banks advise that they never solicit loans via text messages, so if such messages are received, one should first suspect fraud.

According to the Ministry of Science and ICT and the Financial Supervisory Service on the 19th, the number of detected smishing messages last year was about 950,000, a 2.6-fold increase from 360,000 the previous year. As the COVID-19 situation prolongs, the trend is increasing further this year. According to WhoWho & Company, which provides the spam-blocking application 'WhoWho,' among 6.8 million spam reports in the first quarter of this year, smishing cases surged by 40% to about 140,000 compared to the same period last year.

Smishing is a compound word of Short Message Service (SMS) and phishing. Recently, refinancing or government loan impersonation types have increased. They induce phone consultations by claiming that one can switch to low-interest loans handled by commercial banks on behalf of the government. When consumers call, the scammers pretend to introduce loan products but then recommend installing phishing apps or extract personal or credit information to open criminal accounts or use them for high-level financial fraud.

Smishing lures consumers with exceptional loan conditions. They claim to offer a maximum guarantee limit of 200 million KRW with a fixed annual interest rate as low as 2%. The loan period is up to 60 months, with no collateral required, and repayment is on an equal principal and interest basis without early repayment fees. Recently, they even include a ‘Compliance Officer Preliminary Review’ number.

The financial sector advises that such messages should be suspected as fraud first. A banking official stated, "Except for loan interest payment notices and loan extension notices, it is best to consider all others as scams," emphasizing, "Especially, banks do not advertise loans via text messages."

A Financial Supervisory Service official urged, "Do not call the number from which the message was received; instead, contact the bank’s main number to verify." They added, "If you clicked on the internet address sent in the message, an app that intercepts all calls may be installed, so if you clicked the link, verify using another phone."