Special Act on Return of Damages by Telecommunication Financial Frauds

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As you may know, telecommunication financial frauds targeting random financial customers with access to electric media such as phones and the internet has become a serious social problem. Fraud taking advantage of widely used text messages and online transaction is one of the most common cases of such frauds. Criminals camouflage themselves as government authorities such as the prosecutors, National Tax Services or police to lure innocent people into following the directions written on the fraudulent messages, which obviously is a direct way of losing money. As financial loss from such frauds has increased over the past years, the government has decided to make a special act regarding the return of lost money due to telecommunication financial frauds. When the act becomes effective, there will be nine new amendments designed to help the victims of such frauds.

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Core Amendments

1. The name of the act will be changed from ‘A Special Act on Return of damages by Telecommunication Financial Frauds’ to ‘A Special Act on prevention and return of damages by Telecommunication Financial Frauds.’

2. The range of victims subject to reimbursement will be expanded. Under the amendment, financial loss of such victims resulting from loan frauds* will also be returned
*A fraudulent action committed by criminals who snatch the commission or advance payment received by deceiving financial consumers that they would provide or intermediate loans.

3. Provisions on telecommunication financial frauds will be newly established. Attempting such crime will be subject to punishment. Repeated crime will be punished with additional sanctions.

4. Applying for a loan or canceling a saving’s product online will require personal identification verification procedure (by phone call or SMS).

5. Financial firms will delay or temporarily block client’s transaction when they suspect that the customer’s account is being used for telecommunication financial frauds.

6. Bank account holders with a history of getting involved in fraudulent actions will be banned from online financial transactions in order to prevent voice phishing.

7. The FSC will sanction financial firms whose accounts are used in frauds.

8. Those who report fraudulent accounts to the investigative authorities or the Financial Supervisory Service be rewarded.

9. Legal grounds for punishing financial frauds are established.

When these amendments become effective two major changes are expected to take place which will contribute in eradicating such crimes. First, a wider range of criminal acts will be punished under the revised act. Secondly, the amendments will provide the authorities legal grounds to punish criminals. These new changes will lessen victims’ burdens and reduce the gray area where previous laws couldn’t reach out. Moreover, the duration of lawsuits on reimbursement to financial loss from loan frauds are expected to be significantly shortened from maximum of 2 years to three months.

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