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Illegal private lending on rise amid economic slump

All News 09:57 February 03, 2017

SEOUL, Feb. 3 (Yonhap) -- A growing number of South Koreans are seeking help from the state financial watchdog for damages caused by loan sharks amid a prolonged economic slump, official data showed Friday.

A total of 2,306 relevant cases were reported to the Financial Supervisory Service (FSS) last year, up 89 percent from a year earlier. The FSS operates a call center for damages due to illicit private finance.

Unregistered loan sharks usually target cash-strapped people with low credit ratings in urgent need of money, luring consumers via online ads or leaflets on the streets.

A composite photo of bank lending and leaflets on private loans. (Yonhap)

They charge annual interest rates of up to 3,476 percent, far higher than the legal ceiling of 27.9 percent.

"The amount of damages increased especially involving economically vulnerable brackets such as self-employed people and housewives who can't get loans from legal financial institutions," the FSS said.

On the other hand, the reports of voice phishing scams decreased 58.5 percent on-year to 10,945 in 2016, according to the FSS.


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