Gyeonggi-do Takes Action to Protect Investors from Stock-like Investment Advisory Fraud

[Asia Economy (Suwon) = Reporter Lee Young-gyu] # Mr. A (60, male) living in Yongin, Gyeonggi-do, received a phone call in April promising high-return stock information and deposited 9 million won before joining as a member. However, dissatisfied with the content, he requested contract termination after a month, but the company representative discouraged cancellation and delayed for five months. Later, the representative resigned, and the company informed him that after deducting penalties and usage fees, the refund amount was almost nothing.

Gyeonggi-do is taking direct action to resolve consumer damages related to paid stock investment information contracts provided by similar investment advisory services (stock leading rooms) as such consumer damages increase.

According to the province on the 28th, consultations on consumer damages related to similar investment advisory services received by the 1372 Consumer Counseling Center increased 3.1 times from 806 cases in the first quarter (January-March) last year to 2,502 cases in the third quarter (July-September) this year. Especially, the cumulative consultations in the third quarter this year reached 6,785 cases, far surpassing last year’s total of 4,698 cases.

Similar investment advisory services provide advice on investment products such as stocks to an unspecified large number of people. Unlike investment advisory businesses, they can operate by simply reporting to the Financial Supervisory Service without separate professional qualification requirements. According to Financial Supervisory Service data, 1,870 such businesses are currently operating nationwide, with 420 located in the province.

Currently, consumer damages related to similar investment advisory services are handled by the Korea Consumer Agency. However, due to the sharp increase in damages among residents, Gyeonggi-do has decided to directly address the issue. The province accepts applications from victims through the 'Gyeonggi-do Consumer Information Center.'

Regarding the damages, it was found that paid members are recruited mainly through text messages, open chat rooms (stock leading rooms), YouTube broadcasts, and other online media, charging membership fees of several million won while refusing contract cancellations or demanding excessive penalties. Recently, cases involving inducement of contracts by luring members from other companies have also been reported.

Residents who have suffered damages from similar investment advisory service contracts can apply for voluntary mediation with Gyeonggi-do by submitting a voluntary mediation application form, damage proof documents, and resident verification documents.

Through voluntary mediation, opportunities for adjustment or agreement between consumers and companies are provided, and if mediation fails, Gyeonggi-do will support applying for dispute mediation directly to the Consumer Dispute Mediation Committee.

The Consumer Dispute Mediation Expert Advisory Group is operated only by Gyeonggi-do among local governments. Since its launch in September last year, it has received 294 cases including disputes over wedding halls, sports facilities, and automobiles, resolving 166 cases.

Kim Ji-ye, Director of the Gyeonggi-do Fair Trade Bureau, said, "With the stock market boom, consumer damages related to similar investment advisory contracts are increasing, so we plan to focus on voluntary mediation until the end of the year to resolve damages and prevent their spread." She urged, "Consumers should carefully consider contracts with companies that guarantee high returns, as they may result in losses of membership fees amounting to millions of won."