The government has told all financial companies except online insurance firms to temporarily stop selling, promoting or soliciting financial products or services over the phone, via short message services or through emails.
The draconian measure, which took effect Monday and will last until the end of March with a possible extension thereafter, is intended to prevent any illegally obtained financial and personal details from being used for fraud.
The Financial Services Commission came up with the unprecedented measure to relieve public anxiety over personal data safety, following the recent debacle involving three credit card companies ― KB Kookmin, NongHyup and Lotte.
More than 100 million financial details of some 20 million people were leaked from the three card issuers, causing concern among clients that the stolen data could be used for fraudulent transactions.
The financial regulator has tried to ease concerns by saying that there is no chance of the leaked information being used fraudulently as it does not include such key details as passwords and card expiry dates.
Yet the regulator’s assurances have fallen on deaf ears. Card holders have continued to terminate their memberships, cancel their credit cards or demand that they be reissued. Their feelings of insecurity are fueled by reports that personal details have been leaked not just from the three card firms in question but from the remaining four as well.
Many Korean financial consumers have had vague suspicions that their personal details, such as credit card numbers and mobile phone numbers, had been leaked to telemarketers and criminal rings.
The data breach and subsequent news reports on other breaches confirmed their suspicions, deepening distrust in financial companies’ ability to protect personal data.
The temporary suspension of telemarketing is aimed at preventing the public’s growing distrust of financial companies from boiling over to undermine the stability of the nation’s entire financial system.
Yet the measure deals a heavy blow to financial companies. Many feel that the government has gone over the top. But they do not dare revolt against the regulator as they are well aware that their complaint will not get much sympathy from an angry public.
The regulator is advised not to prolong the suspension, given that it has shaky legal foundations and could cause massive layoffs of telemarketers. Furthermore, telemarketing has become an important marketing strategy for many financial firms. A prolonged suspension would seriously affect the sales and profits of small companies that heavily rely on non-face-to-face marketing activities.
To minimize the negative impact, the regulator needs to draw up guidelines on telemarketing as early as possible. It says it will regulate indiscriminate solicitations of loans, credit and other products of financial companies.
The FSC also needs to speed up its planned crackdown on illegal circulation and use of personal information. The crackdown, to be launched jointly with prosecutors and the police, will focus on unregistered money lenders, the main source of demand for stolen financial data.
The crackdown is welcome. Yet it remains to be seen whether the government will be able to root out the black market for leaked data. It is likely to be a tough fight as the government has never attempted to figure out how this market operates or how large it is.