South Korea’s Financial Supervisory Service (FSS) is preparing new guidelines that could significantly broaden compensation rights for cardholders who lose money to voice-phishing and smishing scams.
The move comes amid rising cases of telephone-based and text-based financial fraud, where victims are tricked into entering their card details into malicious apps or websites, said Chosun.
Under the current Specialized Credit Finance Business Act, reimbursement for fraudulent card use is limited to incidents involving theft, loss, forged or altered cards, hacking, or identity theft. Consumers who voluntarily input their card information into fraudulent platforms are excluded, leaving many without recourse even when the fraud is sophisticated and difficult to detect. Financial authorities said on 5 December that the FSS is reviewing a plan to expand the scope of compensation from next year to better reflect the evolving nature of cybercrime.
Some card issuers have already begun offering compensation in small or exceptional cases, but regulators argue that this piecemeal approach creates inconsistencies and fairness concerns across the market. The FSS is therefore considering unified guidelines that would allow cardholders to receive partial reimbursement even when losses stem from voice-phishing or smishing, addressing a gap in the current regulatory framework.
The watchdog is also working to strengthen clarity around compensation standards for traditional fraud incidents. In 2022, the Credit Finance Association published model rules outlining criteria for reimbursing losses caused by theft or loss, but these do not fully address newer, technology-driven fraud typologies such as forged card usage, hacking-related breaches, or cases of identity theft. Regulators believe that clearer standards will be necessary as cyberattacks against financial institutions continue to rise.
The FSS is preparing an organisational overhaul aimed at boosting consumer protection and ensuring readiness against emerging financial crime threats. An FSS official 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 initiative signals a potentially major shift in South Korea’s approach to digital fraud, providing consumers with more robust protection at a time when criminals are increasingly exploiting digital channels to target cardholders.
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