Voluntary Compensation for Voice Phishing by Five Major Banks Remains at 10%... Government Measures Expected

Low Voluntary Compensation Rate for Voice Phishing by Banks
Government Pursuing Strict Liability Compensation

It has been found that the five major banks have completed voluntary compensation for only 10% of applications related to voice phishing crime damages.

According to data submitted by the Financial Supervisory Service to Lee Inyoung, a member of the National Assembly's Political Affairs Committee from the Democratic Party of Korea, 92 out of 173 applications submitted to the five major banks from January last year, when the voluntary compensation system was introduced, to August this year have been reviewed, and compensation was provided in only 18 cases.

This represents about 10% of the total applications and only 0.84% compared to the number of consultations (2,135 cases). Of the applications, 60 cases (34.7%) were excluded from review because the victims transferred the funds themselves or were related to "romance scams" or "secondhand fraud." Even among the 18 cases where compensation was provided due to bank negligence, only 141.19 million won (22.1%) was actually compensated out of the 637.62 million won claimed.

Voluntary compensation covers only the amount remaining after deducting the sum already reimbursed under the Act on the Recovery of Financial Losses Caused by Telecommunications-based Financial Fraud. By bank, there were 6 cases (83.52 million won) at KB Kookmin Bank, 7 cases (13.16 million won) at Shinhan Bank, and 5 cases (44.51 million won) at NongHyup Bank. Woori Bank and Hana Bank had no cases of compensation.

The voluntary compensation system was also introduced this year for secondary financial institutions such as credit card companies, securities firms, insurance companies, and mutual finance companies, but only 2 out of 123 applications (1.6%) have resulted in compensation.

As the government has declared a war on voice phishing crimes, it is expected that "victim protection" will be further strengthened in the future. In August, the financial authorities announced a "no-fault compensation liability" system, which requires financial companies to compensate some or all damages even if there is no fault on their part, and the government and ruling party are working to enact this into law within the year.

If the Act on the Recovery of Financial Losses Caused by Telecommunications-based Financial Fraud is revised to include these changes, financial companies will be required to compensate victims even when they have been deceived by voice phishing criminals into transferring funds themselves.