Police Arrest Large Group for Pocketing 2.6 Billion Won Through Home Appliance 'Rental Scam'

A gang that embezzled tens of billions of won using the so-called 'rental scam' method, where they immediately disposed of home appliances after signing rental contracts and pocketed the sales proceeds, was caught by the police.

[Image source=Yonhap News]

The Seoul Metropolitan Police Agency's Metropolitan Investigation Unit Mobile Squad announced on the 21st that they have booked 44 members of the gang involved in the rental scam on fraud charges, detaining 3 of them and booking 39 without detention. Among the suspects, 10 were sent to the prosecution.

According to the police, from October 2017 to September 2022, they are suspected of defrauding 2.6 billion won by renting high-priced home appliances from well-known domestic rental companies a total of 920 times and disposing of them at prices lower than the market value.

The ringleader Mr. A and others recruited loan applicants for 'durable goods loans' through social networking services (SNS) and lifestyle information magazines, then appointed them as executives to establish about 100 shell corporations. They then placed false orders for expensive rental products under the corporate names, dismantled the installed products, and resold them on used goods trading sites at 50% of the normal price to make a profit.

To avoid detection, they used a method of dissolving the corporation immediately after gaining profits from the rental scam. Also, to avoid suspicion from consumers who repurchased the rental products, they preemptively removed barcode stickers attached to the rental products and disguised themselves as installation technicians from well-known rental specialist companies to deliver the products directly.

[Image source=Seoul Metropolitan Police Agency]

It was confirmed that the ringleader Mr. A committed these crimes by leveraging his past experience of disguised employment as an installation technician at a famous rental company. Based on his experience working at a rental company, Mr. A understood that rental products under corporate names were difficult to recover and collect debts on, which led to the crime.

The police urged people to refrain from purchasing products sold on used trading sites at prices significantly lower than the market value to prevent rental scam fraud. A police official explained, "Products sold at prices more than 30% below market value can be related to durable goods loans," adding, "Recently, cases of victims having to bear contract balances or forcibly return products after purchasing such items have been increasing."

He continued, "This fraud case is causing social damage, including economic losses such as increased rental fees and concerns about the misuse of shell corporations for various crimes," and said, "We plan to strengthen intelligence gathering and crackdowns on related cases."