High-Interest Loans by Coupang Financial, the Installment Finance Subsidiary
Internal Review Underway on Escalating to a Formal Investigation After Examining Interest Rate Calculation System
Coupang Pay Inspection Deadline Extended Again from Ja
The Financial Supervisory Service (FSS) has begun an internal review to determine whether to escalate its on-site inspection of Coupang Financial, a subsidiary of Coupang, to a formal investigation. The review focuses on whether there were any unfair practices, such as abuse of market dominance, during the process of offering high-interest loan products with an annual maximum rate of 18.9%-a rate comparable to loan sharks-to Coupang's partner merchants. The FSS is also discussing which laws may have been violated if any regulatory breaches are identified. As Lee Eogwon, Chairman of the Financial Services Commission, has stated that the appropriateness of the interest rates and repayment methods is under review, there is a growing possibility that the FSS will move from an on-site inspection to a formal investigation. In addition, regarding suspicions of a customer credit information leak at Coupang Pay, the FSS has decided to extend the deadline for its on-site inspection, originally set for the 2nd of next month, to the 9th. This extension is separate from the ongoing joint public-private investigation with the Ministry of Science and ICT into Coupang's headquarters, and is intended to allow for a more comprehensive review of Coupang Pay's information technology infrastructure.
Lee Chanjin, Governor of the Financial Supervisory Service, is delivering opening remarks at the "Financial Supervisory Service Governor - Virtual Asset Business Operator CEO Meeting" held at Dreamplus Gangnam in Seocho-gu, Seoul on September 30, 2025. Photo by Kang Jinhyung
According to the FSS on the 31st, the on-site inspection of Coupang Financial was completed in the middle of this month (the week of the 15th to the 19th). An FSS official stated, "We cannot confirm the exact date, but the on-site inspection to assess the current situation was wrapped up in mid-month," adding, "We will decide whether to initiate a formal investigation after an internal review."
Previously, at a meeting of the National Assembly's Political Affairs Committee on the 3rd, Assemblyman Lee Inyoung of the Democratic Party of Korea pointed out that Coupang Financial was "effectively operating as a high-interest loan business." In response, Lee Chanjin, Governor of the FSS, criticized the company, saying, "Even if the cost is reflected in the interest, it is structurally impossible for such (loan) interest costs (up to 18.9% per annum) to occur," and called it "a typical case of abusing a superior position." Following Governor Lee's remarks, the FSS launched an on-site inspection, but the possibility of escalating to a formal investigation remains open, drawing attention from both Coupang and the financial sector. Coupang has stated, "We have not received any official notification that the FSS inspection of Coupang Financial has concluded."
Assemblywoman Kim Hyunjung, also a member of the National Assembly's Political Affairs Committee, argued at a parliamentary hearing held the previous day-titled "Hearing on Coupang Security Incidents, Personal Information Leaks, Unfair Trade Practices, and Labor Environment Assessment and Measures to Prevent Recurrence"-that a thorough investigation into illegal sales activities by Coupang Financial is necessary. Assemblywoman Kim pointed out that Coupang engaged in "bundling," requiring partner merchants to use Coupang Financial's high-interest loan products as a condition for increasing supply volumes. In response, Chairman Lee stated, "The FSS is reviewing all aspects, including the appropriateness of loan interest rates, repayment methods, and loan advertising."
Amid continuous losses since its establishment, Coupang Financial has also faced criticism for frequent changes in its CEO and internal control executives. In particular, controversy has arisen over the appointment of outside director Lee Seokgeun, a former Deputy Governor of the FSS, who joined the company in 2022, shortly after its founding.
According to Coupang Financial, it recorded net losses of 9.5 billion won at the end of 2022, 9.2 billion won at the end of 2023, 8.5 billion won at the end of last year, and 5.5 billion won at the end of the first half of this year. Meanwhile, over the past four years, there have been eight new appointments and six resignations among executives responsible for internal control, indicating frequent personnel changes. The CEO, compliance officer, chief risk officer, and audit committee members have all been replaced multiple times.
Following the resignation of former CEO Shin Won, Kim Youngjun (formerly of Kim & Chang) and Lee Jooyeon were newly appointed as co-CEOs, while founding members such as former Chief Risk Officer Jang Seonghae (inside director), former Compliance Officer Kim Bora (inside director), and former Audit Committee Member Lee Junghyuk (outside director) have left the company. In contrast, outside director Lee Seokgeun joined the board, and since May of this year, three new executives have been appointed: Wudang Xing as Head of Credit Risk Strategy, Song Woojin as Internal Audit Executive, and Oh Seokjae as Platform Development Executive.
The FSS plans to focus its review on the appropriateness of the high-interest rate calculation system, regardless of the backgrounds of company executives. While interest rates are, in principle, set autonomously by private companies and the market, making direct intervention difficult, the FSS has stated that it will take necessary actions if any regulatory breaches are identified in the calculation methods or procedures. An FSS official said, "If we confirm that there are problems with the interest rate calculation methods, we can issue guidance. If any illegalities are found, we will take action in accordance with relevant laws and regulations."
Meanwhile, the FSS has decided to extend its on-site inspection of Coupang Pay once again. The focus is on investigating possible violations of IT infrastructure obligations and the potential leakage of customer credit information. The inspection, originally scheduled to be completed on the 26th of last month, was extended by one week, and now, due to the need for further review, the deadline has been extended by another week to the 9th of next month.
The decision on whether to escalate to a formal investigation is expected to be made as early as the middle of next month, based on the results of the current inspection. This extension of the on-site inspection is separate from the joint public-private investigation into Coupang's headquarters being conducted with the Ministry of Science and ICT. The FSS is particularly concerned that the "One ID" policy, which automatically enrolls users in Coupang Pay when they sign up for Coupang, could lead to potential leakage of customer credit information from the financial subsidiary, Coupang Pay.
An FSS official said, "Although we extended the Coupang Pay inspection deadline once to the 2nd of next month, it appears that a further extension will be necessary," adding, "We are reviewing additional regulatory issues separately from the Ministry of Science and ICT's investigation, and it is difficult to confirm whether the inspection will be escalated to a formal investigation."
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