Seoul City Intensifies Crackdown on Illegal Used Car Lending Practices Hurting Ordinary Citizens

'Asset Theory' Nationwide Surge Mediated by Used Cars
Investigation into Unregistered Loan Brokerage and Illegal Loan Advertisements
"Request for Reports and Tips to Prevent Economic Damage"

The Seoul Metropolitan Government's Civil Affairs Judicial Police Bureau is launching a large-scale crackdown on loan companies engaging in illegal lending activities during used car transactions. The focus is on unregistered loan companies, with plans to investigate their illegal business operations, loan brokerage activities, and the collection of interest rates exceeding the legal limit.

According to Seoul City on the 21st, this crackdown and investigation will be carried out by deploying civil affairs investigators intensively in areas densely populated with used car markets such as Dongdaemun-gu, Gangnam-gu, and Gangseo-gu.

[Image source=Yonhap News]

The main investigation targets include ▲ illegal business operations and loan brokerage activities by unregistered loan companies ▲ collection of interest rates exceeding the legal limit (annual interest rate over 20%) ▲ illegal loan advertisements by unregistered loan companies ▲ illegal receipt of fees (such as gratuities or upfront fees) by loan brokers from their transaction counterparts. Practices such as selling used cars at prices higher than the market price through asset loans, executing car mortgage loans, demanding excessive fees like vehicle storage charges, or deliberately avoiding contact and later seizing vehicles due to principal and interest arrears are also targeted.

Accordingly, until the end of the year, investigators will be stationed regularly at car sales markets to conduct victim interviews and respond strongly to illegal activities by loan companies. Seoul City is also discussing close cooperation with used car sales associations to maximize the effectiveness of the investigation.

Currently, Seoul City is tracking the actual users of phone numbers used for unregistered loan advertisements disguised as used car sales or collateral and is investigating violations of the Loan Business Act, as well as requesting the suspension of phone numbers used for illegal loan advertisements. To prevent citizen damage caused by illegal loan advertisements, 149 lines were blocked by the Dapo Killer system in 2023, and 112 lines have been blocked as of the end of July 2024.

Seoul City states that illegal lending through car sales is mainly conducted non-face-to-face and often uses burner phones, making it difficult to secure evidence of violations, so active reporting and tips from citizens are necessary. Those who contribute to public interest by reporting or tipping criminal acts with decisive evidence can receive rewards of up to 200 million KRW after review under the "Seoul Metropolitan Government Ordinance on Protection and Support for Public Interest Whistleblowers."

Kwon Soon-gi, head of the Seoul Metropolitan Government's Civil Affairs Judicial Police Bureau, said, "We plan to take strong measures against illegal loan companies that exploit financially vulnerable groups by creating illegal loan products called 'Jasanron' and bleeding them dry economically through this investigation." He added, "We urge active reporting and tips to prevent financial vulnerable groups from suffering economic pain and burdens caused by illegal loan sharks charging high interest rates."