Credit Transaction

The Specialized Credit Finance Business Act is a statute that governs the regulation of credit transactions, and it mainly contains provisions on the business activities of specialized credit finance companies.

The Act works to prevent the legal problems that can arise when a specialized credit finance company extends loans and credit, and to promote consumer protection and the sound operation of the financial market.

It also sets out the basic conditions of credit transactions, such as loan limits, interest rates, repayment periods, and collateral.

In this way, it guards against unfair financial transactions and gives financial consumers the protection they need.

Financial institutions and individuals that conduct credit transactions must comply with the Act, and a violation may lead to criminal punishment and administrative disposition.

A specialized credit finance company, for example a card company, a leasing company, or an installment finance company, may conduct business only within the scope of business prescribed by law.

In other words, a company that engages in business it is not permitted to conduct becomes subject to sanctions.

Under Article 46 of the Specialized Credit Finance Business Act, a specialized credit finance company may conduct the following business.

If a company acts beyond this scope, a penalty surcharge of up to 300 million won may be imposed.

When a dispute over a credit transaction arises with a financial company such as a credit card company, the financial consumer may turn to the financial dispute mediation system, which allows the dispute to be resolved through the Financial Supervisory Service without litigation.

The system resolves disputes fairly through the mediation of a neutral mediation committee, and it plays an important role in protecting the rights and interests of financial consumers and supporting the stability of the financial market.

1. Application for Dispute Mediation

An interested party may apply for dispute mediation by several methods, including the Financial Supervisory Service website, mail, fax, and an in-person visit, and the application form must state the applicant's name, contact information, and the details of the dispute.

2. Investigation and Recommendation for Settlement

The Financial Supervisory Service investigates the facts of the complaint it receives, and if the requirements for a mediation application are met, it may recommend a settlement to the financial company.

If litigation has already been filed, however, or if the application requirements are not satisfied, the application may be rejected.

3. Review by the Dispute Mediation Committee

If a settlement is not reached, the Financial Supervisory Service refers the case to the Financial Dispute Mediation Committee.

The committee renders a mediation decision after hearing the parties, and the parties are notified of the content of that decision.

4. Acceptance of the Mediation and Its Effect

If a party accepts the mediation decision within 20 days, the mediation is established, and it then carries the same effect as a judicial settlement.

If it is not accepted, the mediation is treated as void.

5. Re-mediation and Filing of a Lawsuit

If a significant new fact comes to light or there is a serious procedural defect, a party may apply for re-mediation within one month from the date the decision is notified.

If litigation is proceeding in parallel, that fact must be reported to the Financial Supervisory Service without delay, and the mediation procedure may be suspended where certain requirements are met.

Where a dispute over credit card charges arises with a credit card company, the matter may be resolved through the small claims trial procedure.

Compared with ordinary litigation, this procedure is simpler, less costly, and notable for how quickly it moves.

1. Filing of a Small Claims Trial

A credit card member or other party may file a small claims trial with the court in writing or orally.

2. Recommendation for Performance to the Defendant

Once the lawsuit is filed, the court recommends that the defendant, the credit card company or merchant, perform in accordance with the relief the plaintiff seeks.

If the defendant does not file an objection within 2 weeks, or if the objection is rejected or withdrawn, the recommendation for performance carries the same effect as a final judgment.

3. Conduct of Oral Argument

Oral argument is usually held in a single session, and the judge examines the parties and related persons and may, where necessary, require the submission of written documents.

4. Pronouncement of Judgment

Judgment is pronounced immediately upon the conclusion of oral argument.

By cutting cost and time and delivering prompt judgments, the small claims trial procedure is well suited to the efficient resolution of monetary disputes with credit card companies.