Korean consumer activist groups are looking to arbitrate with local banks attacked by malware on March 20 to seek compensation for consumers who may have suffered losses from the latest nationwide network crash.
The Financial Consumer Agency and Korea Financial Consumer Federation are joining forces to hear consumer concerns even though Shinhan Bank and Nonghyup have restored most of their systems since the cyber attack.
They plan to negotiate on behalf of consumers, but will file a class action lawsuit should both sides fail to reach a reasonable compromise that can make up for losses during the shutdown.
The FCA, which arbitrated in 2011 when Nonghyup networks were hacked and crippled by a distributed denial-of-service attack, said consumer losses could be bigger this time compared to two years ago as the recent network shutdown also occurred at Shinhan Bank, which has an expanded diverse pool of retail customers and corporate clients. Banks, meanwhile, did not incur any financial losses from the incident, financial regulators said.
In 2011, only about 100 people filed damage reports with the activist groups against Nonghyup, which mainly provides loan services to the agriculture industry.
The scale of the loss then was considered moderate, but the latest attack on Korean banking networks further exposes their vulnerability, despite constant calls for stronger security systems protecting consumers’ personal information against cyber terrorism and hacking.
The FCA is also moving to represent consumers as well as small and medium enterprises to file a class action lawsuit against Korea Exchange Bank over its alleged interest spread rigging.
KEB, owned by Hana Financial, is under investigation following a prosecutors’ raid ― which the bank initially denied to the press ― to seize documents that could possibly lead to evidence of its malpractices against SMEs.
Korea’s leading foreign exchange bank is alleged to have been unfairly raising its interest spread over internal benchmark deposit rate, despite a low market interest rate, as a means to increase its margin since 2006, when U.S. buyout fund Lone Star was its controlling shareholder.
Korea Exchange Bank CEO Yun Yong-ro apologized over the matter at the bank’s shareholder meeting on Thursday, saying that the spread hike was aimed at seeking short-term gains, which is a common feature of private equity, a move facilitated by Lone Star when it was a major shareholder.
SC Bank Korea, Citibank Korea and Kookmin Bank are also among local commercial lenders highlighted for having a “high” interest rate spread on loans extended to households and SMEs.
About 95,000 customer complaints were filed in 2012, up almost 12 percent from a year earlier, according to the Financial Supervisory Service.
Complaints included unfair loan collection and unnoticed interest rate hikes on loans by banks, it said.
By Park Hyong-ki (firstname.lastname@example.org)