Tattooed gang members ran illegal loan operation charging up to 2,400% interest

By Kim Do-yoon, The Herald Business

"You're not going to make the payment, are you? You won't answer your phone either. We're proceeding with collections. If contacting your emergency network doesn't resolve this, we will visit your home and your workplace."

A criminal organization that posed as a licensed lender to lure financially vulnerable borrowers — then charged average annual interest rates of 2,400% — has been arrested by police. The gang pocketed roughly 200 million won ($129,000) in illicit gains.

The Seoul Metropolitan Police Agency's Wide-Area Crime Investigation Unit announced Tuesday that it had arrested nine members of the organization, including the ringleader identified only as "A," on charges of violating the Lending Business Act. Three of the nine are in detention as the investigation continues. The group had posted fraudulent advertisements on loan brokerage platforms, presenting themselves as a legitimate registered lender before steering borrowers toward their unlicensed operation.

According to police, the suspects lent approximately 300 million won ($193,000) to 46 victims between April 2022 and March 2025, collecting about 500 million won ($322,000) in repayments — yielding illicit profits of roughly 200 million won ($129,000).

The group posted false advertisements on online loan brokerage platforms, presenting themselves as a registered lender to obtain contact information from people in urgent need of cash, then funneled those borrowers to their unlicensed lending operation.

Most victims were daily laborers and salaried workers in their 30s to 50s — people with limited access to mainstream financial services.

The gang required borrowers to submit a selfie holding a handwritten IOU along with contact information for 10 family members or acquaintances. They then issued ultra-short-term loans of between 300,000 won ($193) and 1.5 million won ($966), demanding full repayment of principal and interest within two weeks.

A borrower who received 300,000 won ($193) had to repay 500,000 won ($322) two weeks later; one who received 700,000 won ($451) owed 1 million won ($644) after the same period. Converted to an annualized rate, those terms translate to roughly 1,117 to 1,738 percent.

If a borrower failed to repay on time, the gang charged an extension fee of 50,000 won ($32) per day, pushing the effective interest rate far above the legal maximum.

Once extension fees were factored in, the average annualized interest rate reached 2,400 percent. One victim bore an effective rate of 43,800 percent — the gang had lent that person 250,000 won ($161) and demanded 550,000 won ($354) back the very next day.

The organization divided responsibilities among a ringleader, call-center staff and a sales team. Investigators found that the gang approached six victims struggling to repay their loans, offered to waive interest if they handed over their bank accounts, and then used those accounts to facilitate further crimes.

In practice, the gang would lend 1 million won ($644) and require repayment of 1.4 million won ($902) two weeks later, while dangling an offer: allow the gang to use the borrower's account for two months and the interest would be reduced, with the principal split into two installments of 500,000 won ($322) each.

The gang also carried out illegal debt collection against delinquent borrowers. Sales team members called those who could not repay and threatened to send their loan details and IOU photos to family members and acquaintances via social media unless they paid up.

An amendment to the Lending Business Act that took effect July 22 last year restricts the enforceability of antisocial loan contracts. Loan agreements carrying annual interest rates above 60 percent — three times the legal ceiling of 20 percent — can be voided in their entirety, including both principal and interest. Contracts signed by unlicensed lenders are similarly subject to nullification.

"Unlicensed lenders and loan sharks that prey on financially marginalized people who need quick cash are not a financial service — they are criminals," a police official said. "We will strictly crack down on illegal private lending while doing our utmost to protect victims."