Credit Card Scam Worth Some 10 Billion Won

Seven domestic credit card companies including Kookmin Card, Samsung Card, and Korea Exchange Bank Card and conglomerates including Lotte Department store and Kyobo Life Insurance were said to have incurred a total loss of about 10 billion won from a scam. These companies issued credit cards to a group of swindlers who stole and used mentally challenged people’s names. It is said that in the process of card issuance, they did not check whether the applicants are the people themselves.

The cyber investigation team of the Seoul Metropolitan Police Agency on Tuesday arrested eight suspects including a person who is only identified as his/her surname Chung on charges of violation of the credit and financial business act. They stole private information of 500 mentally ill patients who are being institutionalized at convalescent hospitals for mental patients, made fake identity cards, applied for credit cards, and spent 10.2 billion won by using 663 credit cards.

The cyber team applied for arrest warrants for a person whose surname is Park, former government office worker who confirmed the addresses of the mental patients, a process that is necessary for fabricating identity cards, on charges of violation of the personal information protection law, and booked three other people including a person with the surname of Yoon on the same charges without physical detention.

According to the police, the suspects including Chung stole personal information on 500 mental patients at two mental hospitals in Gyeonggi Province and fabricated identity cards. They submitted card applications to card issuers who are negligent in personal check and received 663 credit cards. They used cash advances and bought goods using these credit cards.

The police’s investigation revealed that they employed part-timers to fabricate cards on computers in Internet cafes.

According to the results of the investigation, credit companies issued credit cards without proper process of personal check and 18 backs allowed them to open accounts without checking on their real names. Among the banks are Cho Hung, Shinhan, Kookmin, and Industrial Back of Korea.

Kookmin Card suffered the biggest loss of some 2.4 billion won (105 cards), followed by Samsung’s loss of 2.31 billion won (96 cards) and Korea Exchange Bank Card’s loss of some 1.52 billion won.

Kyobo Life Insurance incurred a loss of 94 million won by issuing 26 cards while Lotte Department store got a loss of 146 million won by issuing 46 cards.

An official with the police said that it would report 7 card companies and 18 banks’ violation of the real name law and the law on credit and financial business to the Financial Supervisory Commission. "The police is investigating the process in which personal information flowed out of the mental hospitals," he said.

Hoon Lee dreamland@donga.com