Even principal to be reclaimed from illegal private loans

The main opposition Democratic Party of Korea is set to propose an amendment to the current Act on Registration of Credit Business and Protection of Finance Users ("Credit Business Act") to address the issue of illegal money lending. This amendment seeks to significantly tighten the requirements for establishing credit businesses and allow the recovery of all proceeds from loan sharks, including the principal amounts. Following discussions in a high-level party-government council meeting in June, the ruling People Power Party also plans to introduce its own amendments to the Credit Business Act as early as September. These amendments will include stricter oversight of online credit platforms and measures to prevent illegal private loan advertisements online. The move comes in response to The Dong-A Ilbo's investigative series, "Trap: Caught in the Money Trap," which exposed the reality of online platforms promoting private loans, prompting politicians to finally take action.

On Friday, the Democratic Party of Korea's vice floor leader announced plans to introduce the amendment to the Credit Business Act next week, aligning it with the party's core policy objectives. The proposed bill would increase the minimum capital requirement for credit businesses from the current 10 million won to 300 million won—a thirty-fold increase. It also nullifies any loan contracts exceeding the current maximum interest rate of 20%. It restricts illegal private lenders from using intermediary online platforms such as "Loan Land," often used by low-income individuals.

Before the National Assembly regular session begins in September, the opposition party intends to present this amendment as one of its key policy initiatives following internal consultations. A key pro-Lee faction member within the Democratic Party of Korea noted that tackling illegal private loans has been a central issue for party leader candidate Lee Jae-myung since his time as mayor of Seongnam City, where he focused on supporting low-income and ordinary citizens. The bill is expected to receive strong support at the party level.

The ruling party also plans to introduce legislation to regulate illegal money-lending advertisements on social networks and online community forums. This bill will include provisions to nullify illegal private financing contracts, especially those that involve coercing borrowers into providing contact information for acquaintances and family members or taking nude photographs of the victims.


윤다빈 기자 empty@donga.com