Lending Business Act Violation Lawyer
Lending Business Act Violation Lawyer | Understanding the Criminal and Administrative Exposure
The Act on Registration of Credit Business, etc. and Protection of Finance Users (commonly called the "Lending Business Act", 대부업법) regulates who may lend money for profit, how much interest may be charged, and how debts may be collected. Violations frequently lead to both a criminal case and separate administrative action by the local government or Financial Services Commission. Because unregistered lending, interest-rate violations, and illegal collection conduct each carry distinct elements and penalties, the right defense strategy depends on which specific provision is at issue and whether the conduct was a single incident or a repeated business practice.
Lending Business Act Violation | Operating a Lending Business Without Registration
Lending money for profit as a business without registering with the relevant authority is a core violation under the Act, and prosecutors often focus on whether the conduct amounts to a 'business' rather than an isolated personal loan.
What counts as 'doing business'
A person who engages in money lending as a business without registering as a lending business operator can be punished (대부업법 제19조, 제3조). Whether a single loan to a friend or family member crosses into 'business' activity depends on repetition, advertising, and profit-seeking intent, and this factual question is often the central defense issue.
Corporate and unregistered branch structures
Operating through an unregistered branch, or continuing to lend after a registration has expired or been revoked, is treated the same as never having registered. Investigators typically review transaction records, advertising materials, and communication logs to establish the scale and continuity of the lending activity.
Lending Business Act Violation | Charging Interest Above the Statutory Ceiling
The Lending Business Act and the Interest Limitation Act set a maximum interest rate, and charging above that ceiling is a criminal offense regardless of whether the borrower agreed to the rate.
The statutory interest ceiling
A lender who receives interest exceeding the rate set by Presidential Decree can face criminal punishment (대부업법 제19조, 제8조). The ceiling has been lowered several times, so the applicable rate depends on when the loan agreement was made, which is a factual point worth checking carefully.
How disguised fees and 'agreed' rates are treated
Prosecutors and courts look past the label used in a contract — arrangement fees, late fees, and other charges collected alongside interest can be added back into the effective interest rate calculation. Defense often centers on recalculating exactly what portion of the total amount received legally qualifies as interest.
Lending Business Act Violation | Illegal Debt Collection Practices
Even a lawfully registered and properly priced loan can generate criminal liability if the collection method itself is illegal, since the Act separately restricts how debts may be collected.
Prohibited collection conduct
Using violence, threats, repeated visits or calls that cause fear, or disclosing a debtor's obligation to third parties (such as an employer or family member) to pressure repayment is prohibited (대부업법 제9조의4). These provisions apply not only to registered lenders but often to collection agents and third-party collectors acting on their behalf.
Distinguishing legitimate demand from harassment
Sending a formal demand letter or filing a civil suit is legitimate; the dispute usually arises over the frequency, timing, and manner of contact, and whether the debtor's workplace or family was informed without necessity. Call logs, message records, and witness statements from the debtor are typically the deciding evidence.
Lending Business Act Violation | From Investigation to Resolution
We review the loan contracts, transaction records, and any collection communications to identify which specific provisions are implicated and whether the conduct is likely to be treated as a single act or an ongoing business.
For criminal violations, the case typically starts with a complaint or a referral from the financial supervisory authority, followed by a police or prosecutorial interview. Preparing a consistent account of the transaction history before questioning is important.
Separately, the local government (Si/Gun/Gu) or Financial Services Commission may open an administrative review that can lead to business suspension or registration revocation, on a timeline independent of the criminal case.
The prosecutor decides whether to indict, issue a summary indictment (fine-only), or close the case without charges depending on the amount involved, whether it was a first offense, and the harm caused to the borrower.
If indicted, the case proceeds to trial where sentencing factors such as the number of victims, total illegal interest collected, and any restitution made are argued; many cases are resolved through a summary order or negotiated plea on the facts.
Lending Business Act Violation | How Fees Are Calculated
The initial retainer is generally set based on the stage of the case (police investigation, prosecution, or trial), the number of victims or transactions involved, and the complexity of the interest-rate recalculation required.
If a success fee applies, it is typically tied to a defined and lawful outcome such as a non-indictment decision, a fine instead of imprisonment, or a suspended sentence, agreed upon in advance in writing.
If a parallel administrative sanction (business suspension or registration revocation) must also be contested, this is usually billed as a separate matter because it involves different evidence and a different authority.
Costs such as document retrieval, expert calculation of effective interest rates, and travel to a court outside Seoul are billed separately as actual expenses.
※ Costs vary depending on case complexity and specific circumstances; exact fees will be provided during consultation. No specific outcome is guaranteed.
Lending Business Act Violation | Self-Check Before You Talk to Investigators
1️⃣ Am I Actually Running an Unregistered Lending Business?
- Have I lent money to more than one person, or more than once to the same person, for profit?
- Did I advertise or hold myself out as available to lend money?
- Am I currently registered, or was my registration ever suspended or revoked before I continued lending?
- Have I structured the loans through a company or informal branch that isn't registered?
2️⃣ Could My Interest Rate Exceed the Legal Cap?
- Do I know the statutory interest ceiling in effect on the date each loan was made?
- Did I collect any arrangement fees, late fees, or other charges on top of stated interest?
- Have I calculated the effective annual rate including all fees, not just the labeled 'interest'?
- Has a borrower disputed the amount of interest I collected?
3️⃣ Could My Collection Methods Be Considered Illegal?
- Have I contacted a debtor's employer, coworkers, or family about the debt?
- Have I visited or called a debtor repeatedly in a way that could be seen as intimidating?
- Did I use threats, or imply consequences beyond a normal legal collection process?
- Am I using a third-party collection agent, and do I know how they are contacting the debtor?
4️⃣ Am I Facing Both Criminal and Administrative Proceedings?
- Have I received any notice from the local government or Financial Services Commission separate from a police summons?
- Do I understand that resolving the criminal case does not automatically resolve an administrative suspension or revocation?
- Have I kept copies of all loan agreements, ledgers, and payment records in case both proceedings request them separately?
