Court: "If You Lent Your Seal and Bankbook, You Must Be Responsible for Double Loan Fraud"

[Image source=Yonhap News]

[Asia Economy Reporter Kim Daehyun] Even if a victim's name is stolen in a double loan scam after lending bankbooks, seals, etc. to a fraudster, the court ruled that the financial company must bear responsibility for the loan.

According to the court on the 23rd, the Civil Division 18 of the Seoul Central District Court (Presiding Judge Park Junmin) recently ruled in favor of the plaintiff in the first trial of a loan repayment lawsuit worth about 250 million KRW filed by automobile finance specialist company A against Mr. B.

Earlier, in January 2019, Mr. B signed a one-year lease contract for an apartment in Gangseo-gu, Busan, with a deposit of 260 million KRW. During this process, he gave his ID card, seal, certificates, bankbook, and mobile phone to Mr. C and entrusted him with preparing the loan documents.

However, Mr. C was a 'double loan' fraudster. It was investigated that he, along with accomplices, applied for loans twice under the names of borrowers including Mr. B and embezzled the funds. He was sentenced to two years in prison last September on charges of fraud and forgery of official documents. Mr. B was also investigated by the prosecution for aiding fraud and violating the Electronic Financial Transactions Act but was not indicted.

The company A, where the 'double loan' was processed, filed a lawsuit against Mr. B. It was confirmed that A sent the loan funds to Mr. B's bank account after receiving application documents through a consignment company. This was done by Mr. C under Mr. B's name, and when A called during the loan process, the mobile phone under Mr. B's name was also found to be in Mr. C's possession.

A claimed, "The contract was concluded either directly by the defendant or by Mr. C acting as his agent, and later the defendant's double loan was confirmed," adding, "The defendant has the obligation to repay the principal and interest of the loan accordingly."

On the other hand, Mr. B's side rebutted, stating that he did not prepare any loan-related documents for A nor authorize Mr. C to conclude such contracts. They also argued that A was responsible for negligence of duty by failing to properly verify the identity.

The first trial sided with the financial company. The court explained, "The defendant appears to have handed over the seal to Mr. C and did not get it back, and the loan contract documents were prepared and submitted to A during that time," adding, "It is difficult to see that the defendant signed and sealed the entire contract in a completed state, and it seems Mr. C completed it using the seal."

At the same time, the court recognized Mr. B's 'apparent agency liability.' Apparent agency is a civil law mechanism to protect a good-faith third party who believed that the agent had authority at the time of the agency act. The court said, "The plaintiff believed that Mr. C was authorized to conclude the contract on behalf of the defendant, and there was a justifiable reason for this," adding, "The defendant bears responsibility for this loan contract under Article 126 of the Civil Act regarding apparent agency."

Furthermore, the court added, "It would have been difficult for the plaintiff to suspect the consignment company employee," and "The plaintiff received all related documents from the defendant, among which the certificate of seal impression was issued directly by the defendant."