The Korea Credit Finance Association (KCFA) identified 7,855 instances of suspected illegal lending advertisements during a two-month inspection ending in June, marking a 48% increase compared to the previous year’s 5,292 cases. The surge, driven largely by social media and video-based platforms, has prompted the association to coordinate with regulatory authorities to block access to these illicit financial services.
Surge in Illegal Online Financial Advertising
The KCFA conducted its "Online Illegal Private Finance Advertisement Inspection" between April and June, targeting portals, social media platforms, and YouTube. The data shows a significant rise in unauthorized solicitations, with 77.7% of the identified advertisements appearing on major social media networks, including Facebook, Instagram, and YouTube.
According to the KCFA, the rise in volume is tied to the increasing accessibility of artificial intelligence (AI) video production tools. These technologies allow illegal operators to mass-produce high-quality, deceptive video advertisements, which the association notes are becoming more covert and repetitive in their distribution patterns.
Deceptive Tactics Used by Illegal Lenders
Illegal lenders are increasingly mimicking legitimate financial institutions to gain the trust of vulnerable borrowers. The KCFA reported that the majority of the flagged advertisements utilized specific keywords associated with government-backed programs to appear authentic.
Common deceptive strategies identified by the association include:
- Misappropriation of Government Branding: Advertisements frequently use terms such as "Government Support," "Commoner Loans," "Sunshine Loan," or "Smile Microcredit" to falsely suggest affiliation with public sector financial products.
- Fabricated Legitimacy: Many operators include phrases like "Officially Registered Company" or "Legal Lending Firm," often accompanied by fake registration numbers and company names.
Regulatory Response and Consumer Protection
To mitigate the impact of these campaigns, the KCFA is transferring the collected data—including the content of the advertisements and the associated telephone numbers—to the relevant government agencies responsible for the "One-Stop Comprehensive Support System for Illegal Private Finance."
This institutional response aims to facilitate immediate enforcement actions, such as blocking the distribution of the illegal advertisements and suspending the use of the phone numbers utilized by these entities.
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