Blog, Criminal

Every traveler and expat is wary of it: fraud. It is quite common for foreigners to come to a new country and face scams or fraudulent behavior, simply because local criminals want to take advantage of their ignorance of the culture, language, or customs. Luckily, not everyone has to deal with fraud. Even more, when you do become the victim of fraud, there are legal pathways to take.

In South Korea, like in other countries, expats – and local citizens – can fall victim to fraudulent crimes. Examples are voice phishing, tax fraud, and more. Luckily, there are many accomplished lawyers in Korea that can help with fraud cases. For expats, there are also English-speaking lawyers that can offer assistance with the next legal steps, like Seoul Law Group.

What Is Fraud?

According to the Merriam-Webster dictionary, Fraud is deceit, trickery, “specifically: intentional perversion of truth in order to induce another to part with something of value or to surrender a legal right.” But let us look over the meaning of the legal term. What exactly does “fraud” mean as a crime in Korean law?

In order to establish “fraud” as a crime, the following four requirements must be met.

First, you must “deceive” the victim. “Deceiving” means misleading another person by falsely representing facts.

• You can deceive another person only by your action without speaking. For instance, if a customer enters a restaurant and eats food, their action clearly means “I have money and I will pay for the food.” So if the customer refuses to pay for the food after eating, it is a fraud. They “deceived” the restaurant as if they were going to pay even though they were not.
• “Deceiving” can occur by not only providing false facts, but also by intentionally withholding the important information. For instance, if you sell a building to another person but you deliberately hide the fact that the building has a significant problem, it is a fraud.
• Of course, the victim must be deceived by the deception. Even if you lied, it is not a fraud if the victim was not deceived.

Second, the victim must “dispose” of their property or other legal rights (“act of disposal”) as a result of the deception.

• Any act that can cause property damage to the victim can be an “act of disposal.” Paying their money, giving their goods, signing contracts, dropping lawsuits, releasing someone from debts, etc.
• “Act of disposal” must be done willingly by the victim. This is important because it differentiates fraud from theft or robbery. For instance, if you deceived the victim that you are a bill collector and the victim paid you money, that’s a fraud. But if you deceived the victim that you are a bill collector, so the victim let you into their house, and you stole their money from the house, that’s a theft.

Third, you must obtain “property or pecuniary advantage” as a result of the deception. Even if you lied, it is not a fraud if you did not get anything out of it.

• The property must belong to another person. It is not a fraud if you recover your own property by deceiving another person.
• “Pecuniary advantage” means any kind of profit other than property. For instance, borrowing money, getting guarantees, being released from debt, or even just delaying the payment.

Fourth, you must have an “intention” to commit fraud. Even if you lied, it is not a fraud if you didn’t know it was a lie, or you didn’t mean to get anything out of it.

Examples of fraud are numerous. Think of tax fraud, when an individual or a company willfully falsifies their tax statements so they have to pay less tax. Or (voice) phishing, where people are tricked into revealing their financial information. Nowadays, computer fraud is getting more and more common. Many people receive numerous spam emails daily, that promise you thousands of euros if you just give them your bank details. All of these are common examples of fraud.

Scams are another form of fraud, and are usually described as a scheme used to trick a person out of something, usually money. Scams are usually based on a semi-close relationship with the victim. 

Types of Scams & Fraud and Their Punishments in Korea

So, how many types of fraud are there in Korean law, and what are the punishments for each of them? Let’s have a closer look at Korean law to see how different types of fraud are defined and what their punishment would be. The following definitions are taken from Article 347-349 of the Criminal Act.

1. Fraud

Article 347 states the following punishment for “regular” fraud. “A person who defrauds another, thereby taking property or obtaining pecuniary advantage from another, shall be punished by imprisonment for not more than ten years or by a fine not exceeding twenty million won.” 

In other words, if a fraudulent act is committed, as described previously, the criminal might face up to 10 years in prison or could receive a heavy fine. 

If a criminal forces someone to defraud a victim, they shall also face the same punishment.

2. Fraud by Use of Computer

In this day and age, electronic fraud is more and more common. No surprise that Korean law added a subsection to article 347 to describe separately the punishment for computer fraud. Article 347-2 states “Any person who acquires any benefits to property or has a third person acquire them, by making any data processed after inputting a false information or improper order, or inputting or altering the data without any authority into the data processor, such as computer, etc., shall be punished by imprisonment for not more than ten years, or a fine not exceeding twenty million won.”

This means that any person who, without authority, puts in false data or edits data, shall face up to 10 years in prison or will have to pay a fine of up to 20 million won.

For example, there was a case where the defendant made a credit card online using the name of his ex-wife, of course without her permission, and then received a credit loan using that credit card. The court punished him with a “fraud by use of computer.” (Supreme Court Decision 2006Do3126 Decided July 27, 2006)

Beware that the victim of this fraud case was NOT his ex-wife, but the credit card company that gave him a credit loan. As we explained above, in order to establish fraud, there must be a “deception” and also an “act of disposal” which should be done willingly by the victim. The defendant “deceived” the company as if he was his ex-wife, and the company gave him a credit loan willingly because they were deceived.

3. Quasi-Fraud

Sadly, there are some criminals that take advantage of people that have less experience in the world, such as minors or people with mental disorders. Therefore, article 348 states that any “person who, by taking advantage of the inexperience of a minor or the mental disorders of another, takes property or obtains pecuniary advantage from the latter” shall also face up to 10 years in prison, similar to “regular” fraud.

4. Unlawful Use of Facilities for Convenience

This might be seen as a weird category for fraud: unlawfully using public facilities such as public telephones, and vending machines. If anyone receives any financial benefits or otherwise by using these facilities unlawfully, they shall face up to 3 years in prison, a fine not exceeding five million won, detention, or a minor fine.

The reason why the law had to give this a separate category, was because this does not fit the definition of regular fraud. As we explained above, in order to establish fraud, there must be a “deception” and also an “act of disposal” which should be done willingly by the victim. But if you used a false coin to activate a vending machine to get a free drink, then the victim “deceived” by your false coin would be the vending machine, who is not a person, so technically it cannot be a victim. Furthermore, the victim who gave you a free drink willingly would also be the vending machine, who is again not a person.

Unlawfully using public facilities is clearly a bad thing, but the law could not punish it as a fraud because they could not specify “then who is the victim?” To solve this dilemma, the law simply made another category and gave this crime a new name.

5. Unjustifiable Profit

If a criminal uses someone’s desperate and needy situation to make a profit for themselves, they are charged with unjustifiable profit. This is also seen as a form of fraud, as the criminals are abusing someone’s desperate situation for their own gain. This could lead to a prison sentence of up to 3 years, or a fine of a maximum of 10 million won.

Being a Victim of Scams in Korea

Of course, we hope you never fall victim to scams here in Korea. However, if you do, we want you to be aware of the steps you can take. There are two ways of action you can take. Firstly, under civil law, the victim can sue the perpetrator to recover physical or monetary compensation. Secondly, under criminal law, a fraud perpetrator can be prosecuted by governmental authorities. This can lead to imprisonment or a state-mandated fine.

1. Civil Case

If you wish to sue the perpetrator of the fraud directly, you can do so under civil law in Korea. If you win, the perpetrator can be ordered to pay monetary compensation. A civil case cannot lead to imprisonment. However, unlike criminal cases, civil cases can often lead to financial compensation. 

When starting a civil case, a plaintiff (원고) claims to have incurred a loss due to the defendant’s (피고) actions. As such, the plaintiff demands compensation from the defendant. The defendant has to respond to a plaintiff’s claims. 

If the claimed damages are less than 100 million won, the case shall be presided over by 1 judge. When the claim amount is 100 million Korean won or more, the case will be heard by a panel of 3 judges. After the plaintiff has submitted their complaint, the defendant has 30 days to respond. After this period, the first hearings will follow. Both plaintiffs and defendants will submit their evidence to show that they have been defrauded or that they have not defrauded the other person. After the hearings, the judge(s) will decide whether the plaintiff shall be granted compensation, and if yes, how much.

2. Criminal Case

If the fraud that has occurred to you falls under the categories described in the Korean criminal act, criminal persecution is also an option. You can report to the police that you have been scammed by the perpetrator. The police will investigate whether the perpetrator really defrauded you, and if so, the prosecutor will send the case to the court. The Criminal Court will make the final decision as to whether the defendant (= the perpetrator) really committed the crime, and if so, what punishment to impose on them.

Even if the defendant gets punished, it does not lead to a payout to the victims. Even if any fines are paid, these are paid to the state, not the victim.

However, in real life, reporting to the police is considered the best option for the victims to get their money back. Of course you can file a lawsuit in the civil court, as explained above, but it takes a long time till the civil case ends. On the other hand, if you report them to the police, the scammers will want to cover up the case to avoid punishment, so they will try to give you back the money to reach a settlement. The criminal case can work as a way to mentally pressure the perpetrators to give your money back quickly.

Hire An English Speaking Lawyer

If you have been a victim of a fraudulent crime or scam in Korea, and you wish to seek compensation through a civil case – or perhaps you are being called on as a victim in a criminal case – contact an English-speaking lawyer in Korea as soon as possible. The Korean legal system is difficult to navigate, especially if you do not speak fluent Korean. 

Seoul Law Group employs high-quality lawyers that are all fluent in English. They are specialized in working with foreigners and can help guide you through the legal process. They will make sure you understand everything going on, ensuring that you receive the best representation for your fraud case.