Park Jae-hyuk is a seasoned journalist who has provided comprehensive coverage of South Korea's corporate dynamics, economic policies, industry challenges and the global positioning of Korean companies. Based on the articles he has written since joining The Korea Times in 2016, his investigative approach has helped readers understand corporate governance, economic trends and business strategies shaping South Korea’s economy.
Toss struggles with weakening customer trust
Viva Republica CEO Lee Seung-gun speaks during a press conference at the company headquarters in Seoul in this March 28 file photo. / Yonhap
By Park Jae-hyuk
By Park Jae-hyuk
Viva Republica is facing a bumpy road ahead in its attempt to obtain an internet-only bank license, as the operator of the Toss money transfer app has been embroiled in a controversy over an alleged remittance error, according to industry officials, Thursday.
Given that cybersecurity is a prerequisite for banking services, the fintech firm has gone all out to restore customer trust, pledging to take a legal action against the user who made the allegation.
The trouble started on Oct. 15, when the user wrote on an internet forum, “I transferred 2 million won ($1,710) via Toss, but the money was sent to a wrong person, due to a server error.”
She said Viva was trying to conceal its server error by blaming her for the mistake.
In response, the company wrote on its official website that the user's mistake in typing in account numbers caused the transfer error.
It also said the user got her money back following a standard procedure.
Despite the explanation, the user uploaded several more postings on the internet forum, criticizing Viva for avoiding responsibility.
She said she would file a complaint with the Financial Supervisory Service.
As a result, Viva sued the user Wednesday for defamation by spreading false information.
“It was an inevitable choice to prevent the spread of misunderstandings and damage to our services,” the company said in a statement. “If the petitioner files a complaint with financial authorities, we will do our best to explain this matter, so as to correct the false rumor.”
Some consumers, however, have begun boycotting Toss, expressing concerns over its vulnerability.
They cited a previous leak of personal information that occurred via the Toss app as another reason.
In June, a Viva employee was punished for giving a Toss user's mobile phone number to her ex-boyfriend without the user's consent
Those who offer a person's information to a third party without consent can be jailed for up to five years or face a maximum of a 50 million won fine.
Although Viva apologized to the victim, the company's lax security has become known to the public since she wrote about it online.
A financial industry official suggested that “Viva should avoid arguing with its customers as it is waiting for the financial regulator's decision on the online banking license.”
Another banking industry official said: “Even if it was the customer's mistake, financial firms need to have systems in place to prevent remittance errors from happening in the first place”
The Financial Services Commission plans to grant a preliminary approval to the nation's third internet-only bank operator by the end of 2019.
The Toss Bank consortium, consisting of Viva, KEB Hana Bank, Standard Chartered Bank Korea and several other firms, submitted a bid for the license that it failed to obtain during a previous round of bidding in May.