Financial regulatory officials have been in internal discussions about taking punitive measures against Hyundai Card for alleged business irregularities.
Though few of Hyundai Card’s irregular practices have yet been made public, there is a high possibility that a “caution” or “warning” will be issued to the credit card issuer, according to market observers.
The Financial Supervisory Service conducted an investigation into Hyundai Card by dispatching inspectors to its headquarters in the fourth quarter of last year.
Key sectors for its probe involved customer complaints and its dubious trading with its affiliate Hyundai Capital.
In particular, there has been an allegation that Hyundai Card could slash the ratio of insolvent lending by handing over the soured loans to Hyundai Capital, a loan issuance-oriented firm, via irregular deals.
Hyundai Card CEO Ted Chung is concurrently holding the post of Hyundai Capital chief.
In the consumer protection sector, FSS officials found that there were many disputes between Hyundai Card and its customers.
In the latter half of 2012, Hyundai Card was blacklisted by the FSS as it drew many customer complaints.
“Disputes between financial consumers and card issuers included voice-phishing scams and lenders’ blackmailing of delinquent borrowers,” an FSS official said.
He said that some firms’ irregular loan issuances yielded victims.
“We cannot tolerate the practices in terms of protection of financial consumers.”
In the wake of their irregular lending, many borrowers saw losses from investing in high-risk funds or now suffer from the burden of paying unnecessary insurance premiums, he said.
Inspectors also looked into the internal control system of Hyundai Card during their on-the-spot probe.
In the case of its affiliate Hyundai Capital, the personal information of about 420,000 customers and passwords of 13,000 customers were stolen by hackers in 2011.
The hacking at Hyundai Capital raises the possibility that customer information at Hyundai Card could also have been stolen or be vulnerable to intrusion.
Hyundai Card is one of the nation’s top three credit card issuers and the number of its customers comes to about 9 million. The FSS estimates that one in three Korean adults holds the card.
Hyundai Card has the position that its database is separate from that of Hyundai Capital.
By Kim Yon-se (
kys@heraldcorp.com)
