16 Arrested, 2 Detained for Charging 13,000% Annual Interest on Loans

Authorities in Daegu, South Korea, have cracked down on a sophisticated illegal loan sharking ring, arresting 16 individuals and detaining two key figures. The operation preyed on vulnerable individuals by offering small, non-face-to-face loans while charging astronomical interest rates.

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If a victim borrowed 300,000 won, they were required to repay 550,000 won a week later. Converted to an annual interest rate, this is 5,069%.

Operating from June of last year to May of this year, the ring functioned with a clear hierarchy, including a ringleader, managers, and loan execution teams. The leader, identified only as Mr. A (in his 30s), was responsible for securing operational funds, recruiting staff, and managing illicit profits. Managers handled employee training, acquired personal data, and provided untraceable bank accounts and phone numbers.

The loan execution team was tasked with finalizing loan agreements and engaging in illegal debt collection. Investigations revealed that the group lent amounts ranging from 100,000 to 4 million won to individuals facing difficulties accessing formal financial services. The interest rates were staggeringly high, with one example showing a borrower who took out 300,000 won having to repay 550,000 won within a week, translating to an annual interest rate of 5,069%.

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Illegal loan sharking is a serious crime that profits immensely from the financially struggling, and disrupts daily lives through illegal debt collection.

Beyond the exorbitant interest, the group employed brutal debt collection methods. They obtained handwritten loan agreements with the borrower's photo and at least ten contact numbers of acquaintances. When repayments were delayed, they resorted to verbal abuse, profanity, and relentless harassment of the borrowers' families. In total, the ring lent approximately 1.66 billion won (about $1.2 million USD) to 952 victims through 2,850 transactions. Police have secured a pre-indictment preservation order for over 400 million won in criminal proceeds.

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If you receive illegal loan solicitation calls or become a victim, please report it to 112 immediately.