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Police Crackdown on ‘Jeonse’ Fraud Bags Nearly 3,000 Suspects

Written: 2023-06-08 14:01:51Updated: 2023-06-08 15:45:42

Police Crackdown on ‘Jeonse’ Fraud Bags Nearly 3,000 Suspects

Photo : YONHAP News

A ten-month police crackdown on fraudulent schemes that abuse the country's unique lump sum rental deposit system called "jeonse” rooted out nearly three-thousand suspects.

The Korean National Police Agency said on Thursday that it rounded up two-thousand-895 people through the special crackdown conducted from July 25 of last year to May 28 of this year, with 288 ultimately arrested.

The agency vowed to conduct a thorough and swift investigation into the alleged perpetrators, who were mainly licensed real estate agents or real estate appraisers.

Police also plan to regard large scale “gap investments” without capital as a type of jeonse fraud and seek penalties against perpetrators.

The scheme involves the purchase of property with active jeonse contracts for the difference in value against the lump sum paid by the tenant, thereby requiring the new owner to fulfill repayment obligations but also posing an opportunity to flip the property for profit with minimal investment.

According to the police, most of the victims of such jeonse schemes were young adults in their 20s and 30s. Out of nearly three-thousand victims, more than 35 percent were in their 30s and nearly 20 percent in their 20s.

Losses incurred by the victims were estimated to reach 460 billion won, or approximately 350 million U.S. dollars.

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