"Yoon vows to eliminate illegal private loans... powerless against loan brokers preying on ordinary people"

When Low-Credit Users Post Articles
Private Loan Sharks Contact Individually for Contracts

Operated Only on Ad Revenue Without Charging Fees
Sales Reports Show '0' Performance

No Legal Grounds for Financial Authorities to Supervise

[Asia Economy Reporter Sim Nayoung] # Jeon Eunji (27 years old, pseudonym), who was rejected for loans even at savings banks due to a low credit score, searched everywhere to borrow money and came across a loan brokerage site. After posting "Gyeonggi, hoping for a 50 emergency loan," she was contacted by someone who introduced themselves as the team leader of the ○○ loan team, and the money was deposited into her bank account. Jeon ended up in a situation where she had to pay 70,000 won in interest every week. From the day after the loan, she also started receiving real-time voice phishing calls on her phone.

# Kim Sungjin (31, pseudonym), who works at a pizza shop, borrowed 1 million won through a loan brokerage site due to a shortage of living expenses. The lender deducted 350,000 won as a fee from the start and gave only 650,000 won. Kim paid 150,000 won in interest every Monday. Having even contemplated suicide, Kim reported the case to the Debt Finance Association Center. A center official stated, "This is a damage case where the loan amount was 650,000 won, the repayment amount was 750,000 won, the loan usage period was 36 days, and the interest rate paid reached 286%."

Although President-elect Yoon Seok-yeol promised to eradicate illegal private loans, it has been pointed out that loan brokerage sites remain neglected in blind spots of supervision. Loan brokerage sites serve to easily connect low-credit borrowers with private lenders. However, because they operate on an advertising revenue model without charging fees, there is no legal basis for supervision.

On the 25th, the Korea Institute of Finance released a report titled "Current Status and Implications of Online Loan Business," stating, "Financial consumers are connected to unregistered lenders and even when consulting about loans, it is difficult to know whether the company is illegal." If you type "loan brokerage" into a portal site search bar right now, dozens of seemingly harmless sites flood the results. When loan seekers post inquiries on these loan brokerage sites, lenders call the contact numbers listed there, leading to illegal contracts.

Loan brokerage sites post advertisements for registered lenders and earn revenue. Although these sites are registered loan brokers with local governments, their semiannual business reports show almost no brokerage transaction records. This is because the sites only advertise. The problem is that advertising alone by loan brokerage sites is not illegal. This means there is no way to block these sites that directly connect loan seekers with private lenders. Currently, the only remedy is for the affected consumers to report directly to relevant authorities.

Under the Financial Consumer Protection Act, it is also difficult to classify these sites' operations as brokerage activities. When consumers post inquiries, private lenders contact them individually and proceed with contracts outside the site. Since the sites do not charge fees, it is hard to say they actively provide services to increase loan contracts. For this reason, the Financial Services Commission has judged that "loan brokerage sites engage in financial advertising rather than brokerage."

The report advised, "Loan brokerage sites post advertisements for lenders nationwide, effectively operating on a national scale," and recommended, "Lenders with offices in two or more cities or provinces should be designated as large lenders, and consistent with the Loan Business Act subject to Financial Services Commission registration, loan brokerage sites should be converted to entities subject to Financial Services Commission registration and supervision should be strengthened."