#701, Seoul YWCA, 1-1, Myeongdong 1-ga, Jung-gu, Seoul  (Postal code: 100-021)

Report Data

Korean National Council of Consumer Organizations,

A report on the condition of consumer counseling related to finance and insurance

The Korean National Council of Consumer Organizations (Chairperson: Kim Jae-ok) reported consumer warnings and the current condition of consumer counseling on banking and insurance received via telephone calls (1372) to the Consumer counseling Center between January and August of 2010.

A steady increase in counseling: Insurance counseling doubled

According to the results of an analysis conducted by the Korean National Council of Consumer Organizations, the total number of cases of counseling related to banking and insurance through the nationwide consumer groups between January and August of 2010 was 4,844. The total number of cases of counseling received in August was 766, showing an increase of 83.3% compared to 418 cases in January.

According to loan-related counseling, loan sharking-related harassment is serious

Out of a total of 561 cases of loan-related counseling, cases of excessive interest and fee demand such as excessive loan interest demands (149 cases), excessive fee demands (57 cases), and excessive overdue interest demands (18 cases) took up the majority. Among the cases, counseling related to loan sharking harassment took up 242 cases (43.1%), demonstrating that the problem of loan sharking is still a serious social problem.

According to investment-related counseling, counseling concerning a stock loss or a fund loss accounts for more than half of the cases.

According to investment-related counseling, out of a total of 94 cases, investment loss-related counseling took up the majority, accounting for 46.8% (44 cases). Investment and fund-related counseling were 31 cases, accounting for 66% of the total cases of counseling-related to stock and fund.

According to credit card-related counseling, cases of counseling related to fees, unjustified card issuance, and the use of stolen cards make up the majority.

Out of a total of 1,223 cases of credit card-related counseling, 194 cases (15.9%) of counseling related to excessive fees, 158 cases (13%) of counseling related to the unjustified issuance of cards without one's own consent; 154 cases (12.6%) of counseling related to damage caused by the use of stolen cards made up the majority.

On one hand, counseling related to point accumulation and use (85 cases), prior point purchase system (58 cases), and discount benefits (53 cases) took up the most, showing that consumers had high expectations for various credit card services in addition to financial purposes.

Out of three cases of insurance-related counseling, more than one case was about unpaid insurance compensation.

Out of a total of 2,671 cases of insurance-related counseling, cases of counseling related to unpaid insurance compensation after the occurrence of accidents or diseases accounted for 35.9% (781 cases), which took up the majority, counseling related to a low refund upon early termination of insurance were 411 cases (15.4%), which is relatively high.

Health insurance took up the majority of insurance-related counseling.

According to insurance types, counseling related to health insurance (cancer, other diseases) took up the majority (958 cases), followed by counseling related to auto insurance (439 cases), casualty insurance (329 cases), fire insurance (129 cases), and savings insurance (93 cases). In particular, 166 cases of counseling regarding health insurance (cancer, other diseases) were received in August, which showed an increase of 186% compared to January (58 cases). The statistics shows that a special measure for preventing consumers' damage is needed.

Consumer warnings related to finance and insurance

The Korean National Council of Consumer Organizations reported the following cautionary items for consumers regarding consumer damage related to finance and insurance:

△ When making a contract, carefully read the details of a contract, agreement, and advertising brochures instead of depending on the explanations of employees or sales people;

△ If you make a special agreement outside the terms of a contract, you must specify it in the contract.

△ In preparation for disputes, papers related to the terms of an agreement, contract, and brochures should be kept in a safe location.

△ The changes in the terms and conditions of a contract should be checked frequently. Before agreeing to any change of the terms of an agreement, related contents should be checked.

The Korean National Council of Consumer Organizations demanded a discussion regarding the measures for consumer protection during the G20 Summit held in Korea.

The Consumers International constructed a declaration for the protection of financial consumer protection based on the results of an analysis conducted by the Korean National Council of Consumer Organizations. They plan to send the documents of the declaration to the G20 Summit in Seoul and to demand discussion during the summit.

Appendix: The current conditions and cases of financial and insurance-related consumer counseling

October 8, 2010

Korean National Council of Consumer Organizations

Group Members

Green Consumers Network, Korea Federation of Housewives Clubs, Citizens Alliance for Consumer Protection of Korea, National Council of Housewives Classes, Korea Women's Association, Korea Consumer Affairs Institute, Korea Consumer Education Center, Consumers Union of Korea, National Council of YMCAs of Korea, YWCA of Korea 

[Appendices: Conditions and cases of finance and insurance related consumer counseling]

□ Consumer counseling by month (Unit: case)

Classification	Jan	Feb	Mar	Apr	May	Jun	Jul	Aug	Total
Savings	6	3	11	8	9	6	6	10	59
Loan	50	52	70	77	79	68	75	90	561
Investment	10	13	9	23	15	4	8	12	94
Credit Cards	122	107	157	158	139	178	156	206	1,223
Insurance	207	201	359	412	343	345	387	417	2,671
Lease	4	10	2	4	6	2	2	2	32
Other finance	19	20	34	31	23	30	18	29	204
Total	418	406	642	713	614	633	652	766	4,844

□ Condition of savings-related consumer counseling (Unit: case)

Classification	Savings of Korean money (won)	Savings of foreign currency	Savings for housing purchase (Installments)	Total
Request for personal information	25		2	27
Low interest payment upon early termination	10			10
Low interest payment upon expiration	8			8
Not explaining important information	5		3	8
Invasion of personal information	1			1
Financial scam	1			1
Unfair contract	1			1
Fees		1		1
Other	2			2
Total	53	1	5	59

□ Condition of loan-related consumer counseling (Unit: case)

Classification	Loan guarantee insurance	Real Estate Collateral Trust Loan	Credit Loan	Joint Surety Loan	Savings and Insurance Secured Loan	Housing Loan	Student Loan	Loan shark loan	Other Loan	Total
Request for personal information	5	16	39	7	11	5	7	45	27	162
Demand for excessive loan interest	5	6	20	1	3	4	1	95	14	149
Demand for excessive fees	3	9	17		2	2		17	7	57
Unfair and abusive collection practices	1		9	1				34	10	55
Unfair advertisement			5					17	3	25
Financial scam			4			1		13	3	21
Demand for excessive overdue interest		1			5		2	3	7	18
Credit rating-related	1		3					4	8	16
Invasion of personal information			2		1			5	5	13
Unfair contract			8					3	2	13
Not explaining important information				1	1			1		3
Other	1	1	9	8	3			5	2	29
Total	16	33	116	18	26	12	10	242	88	561

□ Condition of investment-related consumer counseling (Unit: case)

Classification	Trust	Stock	Bond	Investment counseling	Fund	Other investment products	Total
Excessive loss		16		2	18	8	44
Request for personal information	1	10	1	3	2	3	20
Not explaining important information		2		1	7	1	11
Financial scam		1		3		2	6
Low interest payment upon early termination					1	2	3
Unfair contract	1				2		3
Unfair cancellation				2	1		3
Unfair advertisement		1		1			2
Demand for excessive fees	1						1
Invasion of private information		1					1
Total	3	31	1	12	31	16	94

□ Condition of credit card-related consumer counseling (Unit: case)

Classification	Credit Card	Check Card	Total
Request for personal information	194	9	203
Demand for excessive fees	186	8	194
Unfair issuance	154	4	158
Illegal use of credit cards	148	6	154
Point accumulation and use	84	1	85
Unfair request for annual membership fees	82		82
Prior point purchase system	58		58
Discount system	53		53
Invasion of personal information	33	1	34
Demand for excessive overdue interest	35		35
Arbitrary change of the terms of an agreement or contract	32		32
Unfair advertisement	20		20
Unfair and abusive collection practices	19		19
Payment-related	17		17
Cash service complaints	11		11
Credit rating-related	10		10
Not explaining important information	8	1	9
Subscription withdrawal	4	3	7
Unfair cancellation	2		2
Financial scam	1		1
Unfair terms of an agreement or contract	1		1
Other	38		38
Total	1,190	33	1,223

□ Condition of insurance-related consumer counseling (Unit: case)

Classification	Case
Refusal of insurance compensation payment	781
Request for personal information	613
Low interest payment upon early termination	411
Unfair contract	152
Not explaining important information	136
Unfair membership	83
Unfair contract	48
Unfair increase of insurance premium	43
Payment related	40
Unfair advertisement	27
Contract withdrawal	27
Arbitrary change of the terms of an agreement or contract	22
Invasion of personal information	17
Refusal of membership	16
Fees	16
Low interest payment upon expiration	11
Demand for excessive overdue interest	11
Delayed payment of insurance compensation	8
Low interest payment	5
Other	204
Total	2,671

□ Consumer counseling by insurance product (Unit: case)

Insurance Product	Jan	Feb	Mar	Apr	May	Jun	Jul	Aug	Sub Total
Health (cancer, other diseases)insurance	58	69	120	137	120	134	154	166	958
Auto insurance	37	31	52	73	63	63	57	63	439
Casualty insurance	34	30	28	48	41	46	49	53	329
Fire insurance	10	11	18	17	10	17	20	26	129
Savings insurance	7	6	8	10	10	14	19	19	93
Integrated assured value insurance	8	3	15	15	18	13	11	6	89
Pension insurance	4	6	8	10	25	6	8	12	79
Life time insurance	7	2	7	11	10	9	10	13	69
Variable insurance	5	6	4	9	6	5	5	9	49
Product and business liability insurance	1	2	7	5	8		5	2	30
Guaranteed insurance	1	1	2	5	2	4	5	1	21
Travel insurance	2	1	2	2		1	4	5	17
Education insurance			4		3	1	2	4	14
Group insurance	1		1	3	2		1		8
Other private company insurance	32	33	83	67	25	32	37	38	347
Total	207	201	359	412	343	345	387	417	2,671

□ Cases of savings-related consumer counseling

- I withdrew my five-year savings on May 28. If I withdrew it on June 8, I would have gotten 150,000 won more as interest because it would be my third year, but my bank did not give me the related information beforehand, so I lost some money. - I deposited money in my bank account, but on June 17, due to an Internet fiasco, someone withdrew 5,000,000 won from my bank account, but my bank told me that they are not responsible because it was not their security problem.

□ Cases of loan-related consumer counseling

- After I got a text message from a loan shark, I borrowed 55 million won from five private loaners. They deducted 2.75 million won as fees and deposited only 52.25 million won. They also asked me to pay 11 million won as interest for 100 days. - I got a private loan of 2 million won in 1998, and I paid it off. They did not contact me for 10 years, and all of a sudden, they told me I owe them money and asked to me pay back an unpaid amount. - I needed money for an emergency, so I borrowed money from a private loaner 1 million won to use it for two months. They told me that I had to pay 500,000 won for interest. I paid off the principal and interest(about 150,000 won) as well, but they insisted that I had not paid interest. They sent me threatening messages and threatened me that they would send someone to my home.

□ Cases of investment-related consumer counseling

- I had 100 million won in my bank account. One day, my bank told me that I could get a higher interest rate, so I gave them my personal seal. Later I found out that they invested my money in a fund. For four years, I lost a lot of money. - Upon my bank's recommendation, I invested 70 million won in derivative products. When I signed a contract, I was told that my money would be invested in public corporations and big companies, so my principal would be guaranteed and I would get returns every six months. However, a year ago, I found out that I lost 50% of my principal. I complained to my bank, but they told me that my principal will be recovered soon, but later I found out that the person in charge of my fund signed my paper arbitrarily. - An investment consultant recommended investing in stocks, so I bought some. Later, I had an uneasy feeling, so I told them I wanted to sell my stocks, but they insisted that I should wait a little longer. In the meantime, the stock market collapsed, and I do not know the whereabouts of my investment consultant.

□ Cases of credit card-related consumer counseling

- I got a new credit card recently. The person who was helping me asked me how much credit limit I wanted, so I told him that I wanted 5 million won. He told me that I could get a 5 million credit limit, so I decided to get one. Later I got my credit card and found out that my credit limit was only 3 million won. I now know that he decided my credit limit randomly. When I called him to find out what's going on, he simply kept telling me that he was sorry. I think that he exaggerated my credit limit to issue a credit card. - I was told that if I used my credit card on the 7th, 17th, and 27th of each month, I would get a 30% discount, so I decided to get a credit card by paying a 10,000 won annual fee. I used my credit card to pay 260,000 won on May 7th, and 400,000 won on June 25th. Then, on June 27, when I tried to use my credit card at a restaurant, I was told I could not get a discount. When I called my credit company, they told me that I could not get the discount because I did not have a 400,000 won credit in the first month. I think it is unfair. - I have never used my check card, but I found out that 50,000 won was charged for three cases. When I called my credit company for inquiry, they told me that I used it at a restaurant. I think that someone copied my check card and used it illegally.

□ Cases of insurance-related consumer counseling

- While treating my cancer, I could not find a room in the hospital so I moved to another hospital and I am under treatment there. Through my existing medical insurance, I requested special hospitalization special insurance compensation, but my insurance company refused to pay it because it was not for treatment but for recuperation. At present, my insurance company filed a lawsuit against me. - After I signed up for a pension insurance, I paid my premium for three months, but I quit my job, so I could not pay my insurance on time. Later, when I wanted to terminate my contract, they told me that they would not refund unless I paid my unpaid insurance premium. - I got treatment for acute myocardial infarction in 2004, and my doctor told me I was completely cured. I wanted to purchase an insurance policy, so I inquired to several insurance companies, but they refused me after my medical review. My doctor confirmed that I was completely cured, but the insurance companies unjustifiably refused me. I think it is unfair. - I purchased an insurance 15 years ago. I thought that my insurance had expired, so I wanted to get my return recently. However, my insurance company told me that my contract has changed. I don't remember I ever agreed to any change of my contract.