Government declares war on illegal private loans
Victims of the loans include a woman who borrowed 3 million won from a lender in March 2007 when she was a 21-year-old college student. She borrowed the money to pay tuition. She had to pay 350,000 won as interest in advance, and 40,000 won per day for the next three months.
As she failed to pay the money, her debts snowballed. A year later, the amount of money she had to give to the moneylender totaled as much as 15 million won.
The moneylender threatened her to pay off the debts, and finally forced her to work as a hostess at an entertainment bar to earn money needed to pay the snowballing debts.
As the lender extorted 18 million won from her just as interests, her debts did not decrease.
As the situation worsened, she had no choice but to ask her father to financially help her. But the miserable situation facing her, particularly the fact that she worked as a hostess in an entertainment bar, greatly disappointed her father. The father killed her daughter and strangled himself.
Due to such reports of financial damage from illegal private loans, the government declared a war on illegal private loans as part of efforts to protect low-income families.
Following a Cabinet meeting at Cheong Wa Dae Tuesday, the administration announced a set of measures to root out illicit private loans. The meeting was presided over by President Lee Myung-bak.
Under the measures, the government will operate call centers until May 31 under the country's financial regulator and police to collect reports of financial damage from illegal private finance.
It will also crackdown and investigate reports of financial damage from illicit private loans. To that end, it will set up joint investigation teams at prosecutors’ offices in five big cities, including Seoul and Busan.
The government plans to mobilize 11,500 public servants to fight the loan sharks.
People are required to report lenders violating the upper limit of 30 percent on interest rates, threats and assaults from private moneylenders, and other fraudulent activity through voice-phishing and illegal advertising. Those who report their cases can receive consulting, financial assistance, legal counseling and physical protection.