Illegal lending complaints jump 77% in 4 years as pan-government task force stalls for months

"I'll hound you until you're dead." "So you took sick leave from work — just wait, I'll get you fired."

These are excerpts from threatening text messages sent to victims of illegal private lending who fell behind on repayments. Cases of illegal debt collection and intimidation have continued even after victims sought help from the Credit Counseling and Recovery Service.

According to data submitted to the office of People Power Party lawmaker Park Jun-tae by the Financial Supervisory Service and other agencies, the pan-government task force on eradicating illegal private lending — coordinated by the Office for Government Policy Coordination — has not convened since May, despite the ongoing surge in victim reports. The TF has not met even once since Im Gi-geun took office as head of the Office for Government Policy Coordination in July.

An official at the Office for Government Policy Coordination said by phone that whether a meeting would be held this month "has not yet been decided," adding that "working-level staff are preparing to hold one." The TF announced in a 2023 press release that it would regularize quarterly meetings, but since May neither regular nor ad hoc sessions have taken place.

The concern is that illegal lending complaints have been rising sharply this year while the government's response has been sluggish. According to data from Park's office, the FSS's illegal private lending victim reporting center received 12,030 reports and consultations through July — already surpassing the total for all of 2021.

Complaints related to excessive interest rates have been particularly pronounced this year. Data submitted by the FSS to Park's office show that 4,003 such reports and consultations were filed through July, more than double the 1,904 recorded for all of last year. Reports involving unregistered lenders also jumped, from 4,163 in 2021 to 9,293 last year, with 5,199 already filed through July this year.

An analysis of data Park's office obtained from the Korea Loan Finance Association found that the annualized average interest rate charged by illegal lenders reached an all-time high of 545% last year. Rates had already surged from 229% in 2021 to 414% in 2022, and have exceeded 500% on average each year from 2023 through last year. The figure stood at around 479% in the first half of this year.

However, it is not unprecedented for the task force to take time to reconvene after a change in leadership at the Office for Government Policy Coordination. The first TF meeting under former head Bang Gi-seon was held 60 days after he took office, and under former head Yoon Chang-ryul it took 80 days.

Under Im, who took office July 11, the TF had gone 73 days without a meeting as of Tuesday. Political circles have noted that with illegal lending complaints rising sharply this year — and high-interest-rate related reports doubling last year's full-year total in just seven months — a swift pan-government response is urgently needed.

"It is hard to understand why the TF that is supposed to coordinate the pan-government response cannot even hold a meeting as illegal lending victims multiply," Park said. "The Office for Government Policy Coordination must activate the TF without delay, review the response status of relevant agencies, and produce tangible results in cracking down on illegal lending and providing relief to victims."