Stole 5 Billion Won Worth from a Single Stationery Store Over 10 Years "No One Knew" [Seocho-dong Legal Story]

Card Payment Approval 'Arbitrary Cancellation' 1,400 Times Over 10 Years
Squandered on Entertainment Expenses... 5-Year Prison Sentence Confirmed in Criminal Trial
Stationery Store Also Seeks Compensation from Value-Added Network (VAN) Operator

The photo is unrelated to the article content [Image source=Pixabay]

[Asia Economy Reporter Kim Daehyun] This is the story of a crime committed by customer B, who usually purchased stationery at 'A Stationery,' a large stationery store at Express Bus Terminal Station in Seocho-gu, Seoul.

B ran a POS installation and repair business. In 2010, during equipment repair, he discovered a method that could allow non-payment after credit card approval. It involved arbitrarily canceling the approval through payment-related equipment. On April 21 of that year, B purchased 55,000 KRW worth of stationery at A Stationery by card and used a program installed on his laptop to abnormally cancel the payment approval. In reality, the payment was never deducted, and the stationery remained in B's possession.

B's crime continued for over 10 years until February 2020. Over 1,400 instances of fraud resulted in approximately 5.04 billion KRW worth of stationery. Since 2018, the crime became bolder, with days where over 10 million KRW worth of stationery was purchased. It was investigated that B resold the products through online secondhand sites to spend on living and entertainment expenses.

However, B was eventually caught and faced criminal trial for fraud under the Act on the Aggravated Punishment of Specific Economic Crimes. In May 2020, the Seoul Central District Court Criminal Division 30 (Presiding Judge Lee Hyunwoo) sentenced him to five years in prison, stating, "Although he shows remorse, the crime period was long, the damage amount was very large, and no restitution has been made." The verdict was finalized, and B is currently serving his sentence.

Separately from the criminal trial, a civil lawsuit was also underway. C Company, which had a credit card value-added network (VAN) service contract with A Stationery, filed a lawsuit claiming that B and C should jointly compensate for damages of about 5.04 billion KRW. C provided merchant management services to A Stationery, including credit card inquiry, approval, sales slip acquisition, terminal installation, and after-sales service.

A Stationery argued, "C set the program so that approval cancellation could be done even with unregistered terminals, not terminals approved by C." They claimed that during B's fraudulent acts, repeated payments and cancellations were made with the same credit card, but C failed to recognize the abnormal transactions, violating contractual duty of care. They contended that C effectively abetted B's fraud by omission (failure to perform a necessary act).

However, the recent first trial ruled that unlike B, C was not liable for damages. The Seoul Central District Court Civil Division 16 (Presiding Judge Im Gihwan) stated, "There is insufficient evidence to recognize that C abetted by omission as claimed by A Stationery or violated customer protection obligations under the terms of use," accepting only the claim against B. It also added, "It is unclear whether it is practically possible for a VAN company to restrict access to its server to a specific IP address."

In particular, the court noted, "Even A Stationery, which could have easily checked for fraudulent credit card payment cancellations by reviewing daily sales, credit card deposits, and inventory records, only discovered the crime belatedly," and added, "It is difficult to find any fault in C's failure to recognize the crime in advance." A Stationery has appealed this ruling.