[Asia Economy Yeongnam Reporting Headquarters Reporter Kim Yong-woo] “You’re a f***ing b****.” “I’m going to turn your house upside down on Seollal.” These are some of the unbearably harsh ‘KakaoTalk’ messages sent by members of a criminal organization to a young female office worker just starting her career.
A criminal organization that extorted ‘devilish’ interest rates exceeding 4000% annually from financially vulnerable individuals such as young workers was caught by the Busan police.
The police arrested 25 suspects on charges of illegal debt collection, and filed criminal charges including violations of the Loan Business Act, Debt Collection Act, and criminal organization formation, detaining two of them.
According to the police, the suspects formed an illegal loan business criminal organization and provided small loans via the internet to socially vulnerable people who found it difficult to obtain normal financial loans due to COVID-19 and economic recession, charging exorbitant interest rates exceeding 4000% annually.
They also threatened the victims or their families to collect debts if repayments were not made.
A female office worker in her late 20s, Ms. A, was short by 100,000 won last June when trying to pay her credit card bill and phone charges.
She was anxious because she was told that failing to pay on time would ruin her credit.
Ms. A saw advertisements online such as “Small urgent loans, same-day approval guaranteed” and “Don’t hesitate, contact us,” and called them.
Soon, she borrowed 100,000 won under the condition of repaying 180,000 won within six days.
Paying back 100,000 won principal plus 80,000 won interest in six days translates to an annual interest rate of about 4700%, an unimaginably high rate.
At first, Ms. A repaid the small amounts without much difficulty. When she was in urgent need of money, she borrowed again, using the service about seven times.
However, there were times she could not repay by the deadline. The loan company, which had been kind, suddenly changed. Despite her pleas to wait a few more days, she was met with insults and threats like “I’m going to find your house and turn it upside down.”
Chat conversation between the suspect and the female victim who is a young adult starting her career. [Image source=Busan Police Agency]
Ms. A and others are suspected of providing small loans ranging from 100,000 to 300,000 won to people who contacted them after seeing internet loan advertisements from June last year to July this year, charging interest rates exceeding 4000% annually.
The terms required repaying 180,000 won for a 100,000 won loan, and 500,000 won for a 300,000 won loan within six days.
The police said, “It appears that socially vulnerable people such as young workers, who have difficulty obtaining loans from formal banks, borrowed small amounts thinking ‘I probably can repay it.’”
Police investigations confirmed that 243 victims borrowed money at ultra-high interest rates from the suspects.
A police official said, “The illegal profits accumulated by the loan operators are estimated to reach 252 million won.”
Before lending money, they obtained personal information such as contact details of the debtor’s family, acquaintances, and coworkers, as well as photos of the debtor’s face, then used threats or informed acquaintances about the debt if the money was not repaid by the deadline to collect the money.
Among the victims, a young worker in her 20s was found to have taken small loans from 24 different loan companies due to rolling over debts.
The police are expanding their investigation to other loan companies as well.
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