Gyeonggi-do Intensifies Crackdown on Illegal High-Interest Loans 'Proxy Deposits' Targeting Youth

[Asia Economy (Suwon) = Reporter Lee Young-gyu] Gyeonggi Province is launching a crackdown on 'proxy payments' targeting teenagers.

Proxy payment, abbreviated as 'daelip,' refers to the act of lending money and charging a service fee (interest) when teenagers purchase idol merchandise or game items through social networking services (SNS) such as Twitter or YouTube.

The problem is that although the amounts borrowed by teenagers range from 10,000 to 300,000 KRW, proxy payment operators sometimes demand interest rates as high as 1,000% per year, exceeding the legal interest rate (20% per year), under the names of 'late fees (delinquent interest)' and 'service fees (compensation)'.

In particular, they create a sense of familiarity using idol photos and induce transactions as if they were simple financial dealings between acquaintances. If the money is not repaid, secondary damages such as personal information leaks, assault, and threats are known to occur.

On the 12th, the Gyeonggi Province Special Judicial Police announced that, in cooperation with the Gyeonggi Southern and Northern Police Agencies, they will conduct an intensive investigation into the illegal high-interest loan practice of 'proxy payments' targeting teenagers until the 11th of next month.

The special judicial police formed a special investigation team of 12 members for this purpose.

The main crackdown targets include ▲ illegal high-interest proxy payment activities targeting teenagers ▲ SNS proxy payment advertising activities ▲ illegal debt collection and violations of the Personal Information Protection Act.

The special judicial police plan to monitor organized advertising and loan activities on SNS and introduce a 'mystery shopping' investigation technique, where suspicious accounts are approached disguised as customers for enforcement.

They will also establish a cooperative system with related organizations such as the Financial Supervisory Service and the Korea Credit Finance Association.

Currently, the special judicial police operate an illegal private loan damage reporting center to eradicate illegal private financing, which has surged amid the COVID-19 economic crisis, allowing residents to receive investigation, damage relief, and recovery support all at once with a single report.

Kim Young-soo, head of the Gyeonggi Province Special Judicial Police, stated, "High-interest loan extortion acts such as proxy payments are subject to criminal punishment," and urged, "If any teenagers have suffered damage from proxy payments, please do not hesitate to report it."