2026.10.15. The Fair Economy — The Gyeongnam Provincial Police Agency's Metropolitan Investigation Unit announced on the 15th that it had arrested 16 members of an illegal private lending organization that charged interest rates of up to 20,000% per year and, when victims failed to repay, threatened them by spreading false information to their families and acquaintances. Ten of the 16 have been placed under formal detention.
The suspects are accused of using loan consultation databases illegally obtained via Telegram and other platforms, from last year through September this year, to approach victims, lending them between 200,000 and 5 million won while demanding interest rates of up to 20,000% per year. Over the course of more than a year, they are believed to have amassed roughly 2.5 billion won in illicit profits.
Police launched an investigation in July after obtaining intelligence, analyzing victim cases from 23 police stations nationwide along with 18 borrowed-name bank accounts to identify 332 victims. They then analyzed 55 burner phones to identify eight organization members and simultaneously arrested the ringleader and other senior members at their residences and other locations. Police seized 200 million won in cash and 26 mobile phones at the scene.
Police plan to further analyze accounts used for illegal lending to confirm additional victims and proceed with forfeiture and seizure preservation procedures to recover criminal proceeds. They are also considering applying charges of organized crime group formation to eight key executives and plan to guide victims to one-stop comprehensive support systems, including debt adjustment through the Credit Counseling & Recovery Service.
A police official said, "We will respond firmly and with zero tolerance toward illegal private lending crimes that threaten the livelihoods of ordinary citizens through brutal debt collection and interest rates exceeding the legal limit."
Damage from illegal private lending has surged in recent years. According to data submitted by the Financial Supervisory Service to the National Assembly, reported damage from illegal private lending rose each year, from 121.9 billion won in 2022 to 154.2 billion won in 2023 and 203.1 billion won in 2024. In 2025, the figure reached 118 billion won in the first half alone, putting it on track to set a new annual record.
According to the National Police Agency's National Office of Investigation, illegal private finance crimes increased from 1,362 cases in 2021 to 5,519 cases in 2025, a 305.2% rise over four years. During the same period, the arrest rate fell from 74.7% to 61.0%, a 13.7 percentage point decline, attributed to the difficulty of tracking due to strengthened security on social media and the use of dummy phones and dummy accounts.
As in this case, recent investigations have repeatedly revealed that illegal loan sharking organizations buy and sell loan consultation databases on Telegram and other platforms. According to the Korean National Police Agency, in 2025 alone police uncovered more than 120 personal information sales channels on Telegram and seized 32,000 database records containing sensitive information such as loan consultation histories.
These DBs are known to consist of personal information illegally leaked from legal money-lending companies or lending intermediary platforms. They have been resold hundreds of times over several years and supplied to voice phishing and illegal gambling organizations.
Under the Loan Business Act, the maximum interest rate was gradually reduced from 27.9% per annum in February 2018 to 24%, and then to 20% in July 2021. Subsequently, with the enforcement of the revised Loan Business Act in July last year, the principal and interest of contracts exceeding the statutory maximum rate (20% per annum) became void, and penalties were significantly strengthened, including prohibiting unregistered lenders from receiving interest.
The Debt Collection Act prohibits acts such as assault, intimidation, deception, or coercion that cause fear or anxiety to debtors or their related persons, and acts of publicizing false information about debts without justifiable grounds. Violations are punishable by imprisonment of up to three years or a fine of up to 30 million won.
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