Voice phishing losses in South Korea topped 1.2 trillion won last year, the highest on record, prompting a call to shift the country's response from freezing accounts and refunding victims after the fact to preventing the crime in the first place.
Losses from voice phishing reached 1.2578 trillion won ($880 million) last year, a record high, the Korea Microfinance Research Institute said on the 6th. Average losses per victim rose about sixfold to 53.84 million won last year from 8.62 million won in 2016. Of the voice phishing cases reported between January and August this year, approaches made by phone call or text message accounted for 94% of the total.
The number of accounts used in fraud that financial firms froze nearly doubled to 102,307 last year from 57,990 in 2021. Over the same period, however, the share of losses actually refunded to victims fell to 26.3% from 35.9%.
The institute said the current approach of freezing accounts only after money has been transferred has limits as a remedy, and called for an early warning system that links suspected fraud information held by financial firms, telecom carriers, investigative agencies and the private sector.
It proposed in particular connecting fraud-related data accumulated by private operators to the infrastructure that payments pass through, such as the network run by the Korea Financial Telecommunications and Clearings Institute, so that risky transactions can be detected and flagged before a consumer completes a transfer.
Private fraud-prevention platforms currently build up records of suspect phone numbers and account numbers based on user reports. According to the institute, 5.061 billion fraud alert queries were made last year through links between users and financial institutions, and 12.19 million of the transactions involved were identified as suspected fraud just before the money was sent.
"Voice phishing is a composite crime that begins with a phone call or a text message, moves through an account transfer and then shifts the stolen money into virtual assets or other accounts," said Cho Sung-mok, head of the Korea Microfinance Research Institute. "What matters is whether the information needed at the decisive moment, when the loss can still be prevented, is connected."
