Do Not Give Card Information or Personal Data Over the Phone
Report Immediately to Authorities if Suspicious
Photo by Seoul City Provided
As economic burdens increase due to persistent high inflation, high interest rates, and high exchange rates, there has been a rise in fraud cases that lure credit card members who urgently need cash by promoting low interest rates and encouraging them to engage in 'card kkang' (credit card cash advance fraud). The Financial Supervisory Service (FSS) warned consumers to be cautious as these illegal activities are spreading mainly online.
The FSS recently issued a consumer alert at the 'caution' level on the 23rd, stating that illegal companies impersonating regulated financial institutions are increasingly using the card kkang method. Card kkang is a scheme where false sales are generated as if goods were purchased with a customer's credit card, and then the company pays the customer the remaining amount after deducting a fee from the payment received from the card company. This is an illegal act prohibited under the Credit Finance Act, and not only the card kkang operators but also the members who use the service may face disadvantages.
Most card kkang cases involve people in urgent need of cash for living expenses. As of last year, the amount between 1 million and 3 million KRW accounted for the highest proportion (30.1%). According to the FSS, while the detection of illegal credit card transactions is decreasing in terms of merchants, cases, and amounts, high-value card kkang is on the rise. Card kkang cases exceeding 10 million KRW steadily increased from 10.7% in 2021 to 13% in 2022 and 20.7% in 2023. In particular, the proportion of illegal transactions at special merchants focused on online transactions is increasing recently.
Fraud cases that induce credit card payments by promoting real estate investments, event winnings, or lottery number predictions and then disappear are also rapidly increasing.
For example, a virtual platform where real estate can be traded is created on the internet, and investors are recruited by claiming that purchasing virtual real estate with a credit card allows principal protection and high returns through real estate sales or rentals. Afterwards, the fraudsters either do not pay the profits or pay only a certain amount as initial returns before disappearing.
If card kkang or similar illegal fundraising is suspected, it should be reported immediately to investigative authorities. Credit card members should also be cautious as involvement in illegal transactions may result in disadvantages such as transaction suspension or credit limit reduction.
The FSS emphasized, "If you are asked for card information or personal information over the phone or online, it is highly likely to be illegal, so you should firmly refuse." They added, "If you are enticed to invest with promises of principal protection or high returns, it is essential to verify whether the company is a regulated financial institution through the Financial Consumer Information Portal 'Fine'."
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