Korea’s Financial Supervisory Service (FSS) is preparing significant reforms that could allow credit card users affected by voice-phishing and smishing scams to receive compensation.
The financial regulator is reviewing new guidelines aimed at filling a long-standing gap in consumer protection, as losses from these digital fraud schemes continue to rise across the country, said Chosun.
Under current rules set by the Specialized Credit Finance Business Act, compensation is only available when fraudulent card use stems from theft, loss, forged or altered cards, hacking, or identity theft. In these instances, card issuers can reimburse all or part of the financial damage suffered by customers. However, when victims are tricked into entering their card details into malicious apps or websites—a hallmark of voice phishing and smishing—the incident does not meet the legal definition of fraudulent use. As a result, cardholders are typically unable to claim compensation even when substantial losses occur.
Financial authorities confirmed on the 5th that the FSS is exploring options to expand the definition of fraudulent card use from next year. This shift comes as voice-phishing and smishing cases increase, prompting some card companies to voluntarily compensate customers on a limited basis. The regulator has raised concerns that ad-hoc compensation policies create fairness issues, as support varies widely from one card issuer to another.
Alongside the proposed changes, the FSS plans to refine compensation standards for established categories of fraudulent use, such as forged cards, hacking and identity theft. Although the Credit Finance Association previously worked with financial authorities to release model standards in 2022, these guidelines focused largely on the most common scenario of fraud linked to theft or card loss. The regulator believes clearer, more comprehensive criteria are needed, especially as cyberattacks targeting financial institutions are expected to intensify.
Officials have suggested that once the new guidelines are introduced, cardholders may be able to claim at least partial compensation for losses linked to voice-phishing and smishing for the first time. An FSS spokesperson said, “We are planning measures that can broaden the scope of consumer compensation to the extent that they do not conflict with the current Specialized Credit Finance Business Act.”
The FSS is also preparing internal organisational changes designed to strengthen consumer protection, reinforcing its broader strategy to address evolving fraud risks and improve fairness across Korea’s financial system.
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