Malicious Illegal Private Loans Like Sexual Exploitation Debt Collection on the Rise
Illegal Loan Contracts Threaten the Livelihood of Ordinary People
Financial Supervisory Service and Korea Legal Aid Corporation
Support Lawsuits to Nullify Illegal Loan Contracts
On the 7th, the Financial Supervisory Service (FSS) announced that it will actively promote the nullification of illegal loan contracts that exploit the livelihood of the people. The FSS plans to support lawsuits for the complete nullification of illegal loan contracts in collaboration with the Korea Legal Aid Corporation, helping victims break free from the shackles of illegal private loans.
This measure comes in response to the recent surge of malicious illegal private financing, which has been extorting exorbitant interest rates of hundreds to thousands of percent through social networking services (SNS), as well as engaging in aggressive debt collection from acquaintances and sexual exploitation debt collection. Since President Yoon Seok-yeol instructed on the 9th of last month to devise multifaceted methods to crack down on illegal private financing and assist victims, the FSS has been intensifying efforts to eradicate illegal private financing. At a recent field meeting on illegal private financing held at the FSS, President Yoon defined high-interest loans and illegal debt collection as crimes that exploit the livelihood of the people, emphasizing, "We must thoroughly crack down on illegal private financing and confiscate all illegal profits without exception."
The FSS and the Korea Legal Aid Corporation will first select about 10 cases of illegal loan contracts with a high possibility of nullification from those reported to the Illegal Private Financing Victim Report Center and actively support free nullification lawsuits for the victims. Furthermore, they will continue to accept reports from victims of illegal private financing and support nullification lawsuits for illegal loan contracts. On the same day, the FSS signed a memorandum of understanding (MOU) with the Korea Legal Aid Corporation, agreeing that the FSS will cover all litigation costs for nullification lawsuits of illegal loan contracts, while the Korea Legal Aid Corporation will appoint its affiliated lawyers as legal representatives to conduct nullification lawsuits on behalf of the victims.
The FSS explained that if an astronomical high interest rate that the debtor cannot bear is imposed and contact information of acquaintances is requested and collected for use in illegal debt collection, the loan contract itself can be interpreted as ‘antisocial.’ If recognized as an antisocial contract under civil law, it is legally possible to nullify the entire illegal loan contract, including the principal, although there are no related precedents yet.
However, after collecting and reviewing cases, the FSS and the Korea Legal Aid Corporation judged that cases linked to 'vicious illegal debt collection,' such as receiving contact information of acquaintances stored on mobile phones or nude photos for the purpose of illegal debt collection during the loan contract process, or sexual exploitation debt collection, have a high necessity to be actively asserted as antisocial contracts for nullification. According to Article 103 of the Civil Act, legal acts that violate good morals or other social order are null and void.
An FSS official stated, "We will actively strive to support nullification lawsuits so that antisocial illegal loan contracts causing harm through illegal private financing can be recognized as null and void by court rulings, creating the first such case." The FSS also plans to fully participate in the government-wide task force (TF) to eradicate illegal private financing and respond with full force to eliminate illegal private financing.
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
