Loan shark crackdown gets massive response

The government received more than 5,600 complaints in the three days after it opened a call center last Wednesday to help victims of loan sharks, the nation’s top financial regulator said Sunday.

The government last week announced plans to root out illegal private lenders that exploit low-income households with poor credit ratings.

The reported cases involved illegal high-interest loans, mortgage fraud, coercive debt collection and voice phishing.

The FSS has extended the reporting hours by three hours to until midnight on weekdays. Reports of loan shark irregularities are now received from 9 a.m. through midnight on weekdays and from 9 a.m. to 6 p.m. on weekends.

Starting Friday, the Financial Supervisory Service has also been running consultation teams in marketplaces and poor neighborhoods with a high demand for illegal private loans to reach out to people who may find it difficult to report damage by telephone or the Internet.

Low-income earners often turn to illegal money lenders as they grant loans without collateral or conditions on credit ratings.

Many of the victims said threats from illegal lenders were wrecking their homes and making them ill, as they were unable to repay the loans and the snowballing interest.

Of the 5,613 reports, 5,171 were filed to the FSS, and the rest to the police and local administrations.

The total lasses reported was nearly 6.64 billion won ($5.8 million), or about 1.44 million won per case on average.

The FSS is requesting the police and prosecution to investigate some cases and arranging long-term, low-interest loans or free legal consulting services for others by informing the Korea Asset Management Corporation.

Under the law on interest limits, unregistered lenders that charge an annual interest of more than 30 percent are subject to imprisonment of up to a year or fines of up to 10 million won.

If they severely damage debtors’ private lives by causing them to feel fear or anxiety through repeated phone calls and threats, they will face jail time of up to three years or up to 30 million won in fines for violation of the law on fair debt collection.

By Kim So-hyun (sophie@heraldcorp.com)