No-Fault Voice Phishing Liability Could Cost Financial Firms Up to 281.1 Billion Won Annually

A new analysis shows that financial companies could face up to 280 billion won in annual liabilities if a no-fault compensation system for voice phishing damages is introduced — requiring payouts even when firms bear no responsibility for the fraud. According to financial industry sources on July 1, the Financial Services Commission (FSC) submitted these cost estimates to the National Assembly in connection with proposed amendments to the Telecommunications Fraud Victim Refund Act, sponsored by lawmakers Kang Jun-hyun and Cho In-chul of the Democratic Party of Korea. The amendments would require financial companies used by both the victim and the criminal to each cover half of the damages when individual customers suffer losses from voice phishing. The National Assembly's Legislation and Judiciary Committee is scheduled to hold a subcommittee session on July 2 to discuss the amendments. Ahead of the deliberations, the FSC calculated projected payouts for financial companies at various compensation caps, based on 2024 voice phishing incident statistics. The amendment stipulates that per-case compensation limits for financial companies would be set within a range of 10 million to 50 million won. If the cap is set at 50 million won, the total compensation burden for financial companies could reach 281.1 billion won based on 2024 figures. Under this scenario, 12,390 victims with losses of 50 million won or less would receive full compensation, while 2,160 victims with losses exceeding 50 million won would each receive 50 million won. If the cap is set at 40 million won, total payouts would amount to 224.9 billion won. At 30 million won, the figure would be 179.4 billion won; at 20 million won, 148.4 billion won; and at 10 million won, 109.8 billion won. The financial sector is uneasy about the prospect of bearing additional costs potentially reaching hundreds of billions of won each year. Industry players are also concerned that the scale of compensation could continue to expand as voice phishing crimes increase annually and fraud techniques become more sophisticated. The Korea Federation of Banks told the National Assembly, "Voice phishing is a crime that can only be prevented and remedied through the combined efforts of multiple responsible parties." The federation added, "Considering the financial soundness of financial companies and the sustainability of the system, it is necessary for mobile carriers and the public sector — not just financial firms — to share compensation responsibilities." Some observers warn that financial firms may tighten transfer and remittance procedures to reduce their liability exposure. The amendment states that financial companies are exempt from liability "when the victim acted with intent or gross negligence." Specific exemptions include cases where a victim proceeds with a transfer despite a financial company's request to cancel the transaction, or where a victim refuses to cooperate with a financial company's requests. "If remittance procedures are strengthened to meet exemption requirements, it could significantly inconvenience legitimate customers," a commercial bank official said. "If the compensation burden grows, it could also reduce the resources allocated to corporate social responsibility programs in other areas." The Legislation and Judiciary Committee also placed on its July 2 subcommittee agenda another amendment to the Telecommunications Fraud Victim Refund Act, sponsored by lawmakers Han Jung-ae and Cho In-chul of the Democratic Party. This amendment would introduce a plea bargaining system offering reduced sentences to voice phishing participants who cooperate with investigations. The proposal is based on the assessment that conventional investigative methods have reached their limits as voice phishing operations become increasingly organized and specialized, and that insider cooperation is needed to apprehend key participants in these secretive criminal networks. However, the National Assembly has expressed caution. Jeong Myeong-ho, the Assembly's senior legislative counsel, said, "Concerns over judicial fairness and equity could arise from the possibility that perpetrators receive reduced sentences simply for cooperating with investigations." Some voices also argue that it would be more appropriate to impose harsher penalties on criminal participants who refuse to cooperate with investigations, rather than offering leniency to those who do.

No-Fault Voice Phishing Liability Could Cost Financial Firms Up to 281.1 Billion Won Annually

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