Postal carriers to verify store demolitions in crackdown on benefit fraud

South Korea's Ministry of SMEs and Startups is teaming up with Korea Post to prevent fraudulent claims in a program that subsidizes store demolition costs for small business owners who have shut down.

The ministry announced Monday it had signed a memorandum of understanding with Korea Post to strengthen on-site verification under the store demolition support component of the Hope Return Package program.

The agreement aims to tighten field checks as the ministry processes demolition cost subsidies for small business owners who have closed their shops.

Through the Hope Return Package, the ministry helps ease the financial burden on shuttered small businesses by covering store demolition costs. The program is the government's flagship support scheme for helping small business owners get back on their feet after closing, offering one-stop closure assistance alongside demolition subsidies, job placement support, and retraining and re-entrepreneurship education.

Demand for the support has grown as business closures have increased amid a recent economic slowdown. However, concerns have mounted over the potential for fraudulent claims — including fake demolitions — as the per-case subsidy rate has continued to rise. The government has been steadily strengthening its anti-fraud framework to plug fiscal leaks and improve policy effectiveness.

As part of those efforts, the ministry has pursued a range of measures to improve transparency in the demolition cost support program: operating a fraud reporting center, introducing a fraud detection system, and tightening document screening through specialized verification agencies.

The new partnership extends those efforts by building a more efficient verification system that draws on postal carriers' nationwide field network. Previously, field inspectors commissioned by private agencies visited locations in person to confirm demolitions. Going forward, postal carriers will confirm whether businesses have closed and whether stores have been demolished as part of their regular mail delivery rounds.

Postal carriers are particularly well-suited for the role because their daily, repeated visits to assigned zones give them strong familiarity with local commercial areas and individual store conditions, allowing them to more accurately assess whether a business has actually closed or a premises stands vacant. The arrangement is expected to cut the budget spent on field inspections while also improving verification efficiency.

Under the MOU, the two agencies plan to run a pilot on-site verification program for store demolitions, build and operate a joint field verification framework, and share information needed to confirm demolition sites.

The per-check cost will fall from up to 6,660 won in the Greater Seoul area and up to 15,000 won ($10) outside it to 4,280 won. The number of stores that can be verified in a single day will also rise sharply — from a maximum of 15 to an average of 83 in the Greater Seoul area.

The ministry plans to run a pilot in the Chungcheong region first, then review whether to expand the program nationwide based on operational results and feedback from the field.

"This agreement goes beyond simple field inspection cooperation — it is a new collaborative model that puts the postal carrier network, which knows local communities best, to work in on-site verification," said Choe Won-yeong, director general for small business policy at the Ministry of SMEs and Startups. "Through thorough field checks, we will prevent fraudulent claims and further strengthen the transparency of budget execution and policy credibility so that taxpayers' hard-earned money goes exactly where it is needed."