Loan Shark Ring Dismantled After Charging Exorbitant Interest Rates
Authorities have apprehended a group operating as an illegal lending organization, which preyed on individuals in urgent need of funds by charging annual interest rates exceeding a staggering 40,000%. The Seoul Metropolitan Police Agency’s Gangbuk Major Crimes Investigation Unit announced on the 9th that they have booked nine individuals on suspicion of violating the Loan Business Act and have arrested three of them.
Details of the Predatory Operation
The illicit operation, active from April 2022 to March of last year, allegedly lent approximately 300 million won to 46 victims. In return, they are accused of collecting around 500 million won, pocketing a profit of over 200 million won. The average annual interest rate charged was reported to be 2,400%.
In one particularly egregious case, a victim borrowed 250,000 won and was forced to repay 550,000 won the very next day. This resulted in an effective annual interest rate of 43,800%. The individuals arrested, including the alleged ringleader, are all in their 20s and were reportedly acquaintances from their hometown in Ansan City.
Sophisticated Deception Tactics
The group meticulously divided roles, operating with a call center and a business team. They advertised on internet loan comparison platforms, posing as legitimate loan providers to attract individuals facing financial emergencies. After disbursing small loan amounts ranging from 300,000 to 1.5 million won, they demanded victims submit a selfie holding their identification and the contact details of at least 10 family members and acquaintances as collateral.
They then threatened to share the fact of the loan and the victim’s selfie with their family and friends if the loan was not repaid. In six instances, where victims struggled to repay, the organization obtained bank account details from them in exchange for reducing the interest, which were then used for their illegal financial activities.
Victim Profile and Law Enforcement Response
The victims primarily consisted of individuals in their 30s to 50s, including daily laborers and company employees who found it difficult to obtain loans through legitimate channels due to their financial standing. Police have frozen the entirety of the illegal profits generated by the loan shark organization pending further investigation.
Law enforcement officials emphasized, “Loan sharks who exceed interest rate limits are not financiers, but criminals.” They further stated, “We plan to continue to strictly crack down on illegal loan sharking activities that charge exorbitant interest rates.”
