Can Ted Chung stand 2nd blow from FSS?

By Na Jeong-ju

Ted Chung, CEO of Hyundai Card and Hyundai Capital Services

Ted Chung, CEO of Hyundai Card and Hyundai Capital Services, is in the hot seat as regulators are moving to scrutinize his firms.

Following the recent consumer data leaks from local financial firms, the Financial Supervisory Service (FSS) asked the industry to stop selling credit information services as part of an investigation into the theft cases.

However, Hyundai Card has ignored this call, and is still attracting users to its paid credit services while other card issuers have halted similar operations.

According to FSS officials, the firm is not following their guidelines.

“We suspect that Hyundai Card is continuing the services to make people believe that it is different from other financial firms hit by the data breaches,” an FSS official said.

“However, the firm’s affiliate, Hyundai Capital Services, once suffered huge damage from a hacking attack on its consumer database in 2011. It’s quite regrettable that the firm is using the latest theft cases to boost its profits.”

The data leaks occurred at Hyundai Card’s local competitors ― KB Kookmin Card, NongHyup Card and Lotte Card.

According to the prosecution, an official from the Korea Credit Bureau (KCB), a credit information service provider, stole personal information of their card users, and then sold the data to an advertiser. The stolen information was used for marketing activities.

Another FSS official didn’t rule out the possibility that Hyundai Card might be affected by the theft case.

“The victims might include many holders of multiple cards issued by different companies. That means users of Hyundai’s cards can be among the victims,” said the official. “In this sense, it seems irresponsible for Hyundai Card to keep providing the paid credit services. Its behavior is certainly controversial.”

In 2011, hackers stole the account numbers and passwords of some 13,000 customers of Hyundai Capital Services as well as personal information of more than 1.7 million of its customers. The firm apologized for the theft and vowed to enhance its online security systems.

Some industry sources said that regulators are also displeased at the way CEO Chung manages the two firms.

Hyundai Capital is currently facing regulatory sanctions for violating rules on consumer financing.

The firm’s main purpose is to provide installment services to buyers of automobiles. However, over the past years, it has provided loans to people with poor credit ratings who can’t borrow from banks to boost interest income. The portion of its loan business has exceeded the permitted levels.

Last year, the regulator asked the company to scale down its loan business, but the firm didn’t follow, according to the FSS.

“Disciplinary measures will be taken against Hyundai Capital soon,” said an FSS official.

The regulator also punished Hyundai Card last year for poor monitoring of its salespeople. The firm even issued credit cards to five dead people between 2007 and 2013 after being deceived by a salesman.