"Card Companies and Loan Businesses to Strengthen Voice Phishing Prevention Measures"

Legislative Notice Issued for Amendment to the Telecommunications Fraud Damage Refund Act Enforcement Decree
Mandatory Identity Verification for Credit Finance Companies and Large-Scale Loan Businesses

The Financial Services Commission announced on May 11 that it will issue a legislative notice for the amendment of the Enforcement Decree of the Special Act on the Prevention of Damages from Telecommunications Financial Fraud and the Refund of Damaged Funds (Telecommunications Fraud Damage Refund Act) on May 12.

This is a follow-up measure to the "Strengthened Response Plan Against Voice Phishing" announced at the livelihood crime review meeting on March 6. The amendment will impose an obligation on specialized credit finance companies (excluding new technology business finance companies) and loan businesses with assets of 50 billion won or more to verify the identity of users under the Telecommunications Fraud Damage Refund Act.

The Telecommunications Fraud Damage Refund Act requires financial companies to verify the identity of users when they apply for loans or request to terminate financial products such as deposits or installment savings, in order to prevent voice phishing. However, since the law mainly regulates account payment suspension and debt extinguishment procedures for the prevention of voice phishing and prompt refund of damages, credit finance companies and loan businesses that cannot issue accounts have so far been excluded from the scope of financial companies under the Act.

Recently, however, voice phishing crimes have increasingly involved the theft of personal information and the use of card loans from credit card companies or non-face-to-face loans from capital and loan companies, resulting in greater damages. As a result, the need has arisen to impose identity verification obligations on credit finance companies and loan businesses that handle personal loans.

With this amendment, identity verification will become mandatory for specialized credit finance companies (excluding new technology business finance companies) and loan businesses with assets of 50 billion won or more. The financial authorities expect that this will lead to more thorough identity verification in future financial transactions such as loans, thereby strengthening user protection.

The legislative notice period will run until June 23, after which the amendment will undergo review by the Ministry of Government Legislation and is expected to be revised (to take effect six months after promulgation) within the third quarter of this year.