Fraudsters exploit internet-only bank accounts

By Nam Hyun-woo

Online shoppers may have to be more cautious in sending money though internet-only bank accounts because three fraud cases have been reported in the first week since its launch, according to industry sources, Monday.

Two people, who attempted to buy books through a second-hand goods website, claim they sent their money to a seller using a K bank account, but did not receive the books. Another case involves golf clubs.

Experts point out that K bank, which opened on April 3 as the country’s first internet-only bank, is not liable for the mishaps. But they said K bank needs to come up with ways to deal with such fraudsters who try to exploit the debut of the new business.

“Websites and blogs for trading second-hand goods typically have lists containing suspicious sellers’ bank accounts and mobile phone numbers. There is a website specialized in sharing such information,” an official at a local online security company said.

“But their K bank accounts would not be on the blacklist so they were not screened. It is not the fault of K bank. However, easier account opening means it can become more vulnerable to fraud.”

Well aware of the issue, K bank seems to be agonizing over the issue.

“The bank is monitoring suspicious cases, but relevant laws prevent financial institutions from suspending payments without warrants or requests from police,” a K bank official said, adding the bank will promptly take due measures when there is a request from police.

K bank lets people open accounts very easily, which might be attractive not only for customers but also for fraudsters.

Unlike other conventional banks, K bank removed several authentication processes, such as submitting documentation.

Clients can open a K bank account in as fast as 10 minutes through its mobile application, faster than the average 30 minutes for traditional banks. Kakao Bank, another internet-only bank scheduled to launch services in June at the earliest, also boasts that its clients can open an account in seven minutes.

Since 2015, the government has been introducing a number of regulations to rein in the increase of borrowed-name accounts. Conventional banks have since required documentation and as a result opening an account became complicated for clients who do not have jobs or sources of revenue.

But K bank clients are allowed to open accounts without submitting documentation with a remittance cap of 1 million won. If they keep more than 10,000 won in the account for more than a month, the cap is lifted.

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