The Korea Lending Finance Association has initiated its first lawsuit against an individual accused of renting their name to an illegal loan organization. This legal action aims to clarify the boundary between illegal lending and legitimate lending practices while restoring trust in the industry.
On November 5, the association filed a damages claim against H, a name lender, at the Seoul Central District Court. The lawsuit alleges that H provided their name to an officially registered lending company, thereby damaging the reputation and trust of the entire lending sector.
According to the prosecution, H was briefly indicted for aiding violations of the Lending Business Act in a case involving illegal lending organizations announced by the Seoul Northern District Prosecutors' Office on September 10. H is accused of registering a lending company under their name at the request of the head of an illegal lending organization from June 2020 to June 2021, allowing members of the organization to use that name for their lending activities.
The organization reportedly lent approximately 400 million won to 161 borrowers in 1,130 transactions between February 2020 and June 2021, while receiving about 700 million won in repayments. They are also suspected of charging interest rates exceeding the legal limit.
Notably, H is believed to have provided the name of the lending company for advertising purposes, creating an environment where consumers could mistakenly perceive the illegal lending organization as a legitimate entity.
Current lending laws prohibit lenders from allowing others to operate under their name or lending license.
The association is seeking symbolic damages of 2,678 won, calculated by applying 1 won to each of its 2,678 member companies as of the end of October. The association explained that this amount is intended to highlight the damage caused to the trust of all member companies rather than to seek actual financial compensation.
In April, the association announced plans to strengthen both civil and criminal responses to actions that harm the image of the lending industry. This lawsuit marks the first legal action taken under that policy. The association plans to request a fact-finding inquiry from the court to verify the defendant's identity and proceed with related legal processes.
Jung Seong-woong, president of the Korea Lending Finance Association, stated, "Registering as a lender is a promise to uphold the obligations and responsibilities defined by law, and lending one's name to illegal lenders is akin to providing a 'mask' for the illegal financial sector. We will hold accountable those who undermine the trust built by our members through lawful practices."
* This article has been translated by AI.
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