Financial regulators warn of illegal lending ahead of harvest festival
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South Korea’s Financial Services Commission (금융위) advised citizens to be cautious of illegal lenders targeting people who need quick money before the Chuseok holiday.
The commission explained that illegal lenders often advertise “same-day loans” and loans with “no collateral” to attract borrowers with extremely high interest rates. These lenders then engage in illegal collection practices. The commission recommended people first check if they qualify for government-backed financial products, then verify if a lender is registered.
Citizens should immediately stop dealing with any lender requesting interest rates above 20 percent, upfront payments, or excessive personal information. The commission also urged people to document loan agreements and collection attempts. Financial Services Commission officials stated that loan contracts with interest rates exceeding 60 percent are invalid, meaning borrowers have no obligation to repay them. People who have already repaid such loans can request a refund.
During the holiday, people who fall victim to illegal lending can report incidents through the Financial Supervisory Service website or contact the Credit Recovery Committee by phone or at one of 22 nationwide support centers. The commission plans to assign dedicated staff to quickly address reported cases and connect victims with available support.
