Fair Debt Collection Practices Act


Published: 2012-06-01

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 Article 1 (Purpose)   print
The purpose of this Act is to contribute to the development of fair practices in debt collection by deterring debt collectors from abusing their rights or using unlawful methods in debt collection and the protection of decent lives and peaceful living of debtors while ensuring the due exercise of creditors' rights.
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 Article 2 (Definitions)   print
For the purposes of this Act: <Amended by Act No. 11465, Mar. 29, 2011>
1. The term "debt collector" means any of the following persons:
(a) A credit business operator under the Act on Registration of Credit Business and Protection of Finance Users, a credit broker, a person who actually engages in credit business without the registration of credit business, a credit financial institution, or a person to whom a debt under a loan agreement has been assigned or re-assigned by any of the persons named above;
(b) A creditor of a monetary loan, other than those specified in item (a), or a person to whom a debt has been assigned or re-assigned by such creditor;
(c) A person who collects a debt on behalf of another person in return for money or any other economic benefit paid as consideration or in return for a promise to pay money or any other economic benefit as consideration (including a person who pretends to have a debt assigned for the purpose of debt collection);
(d) A person who collects debts for the persons specified in items (a) through (c) in the scope of employment, contract, delegation, or whatsoever the cause;
2. The term "debtor" means a natural person who owes an obligation to pay a debt or who is alleged by a debt collector to owe an obligation to pay a debt (including a guarantor);
3. The term "related person" means a person who lives, or makes a living, together with a debtor, a debtor's relative, or a person who works together with a debtor in a workplace;
4. The term "debt collection" means all activities conducted for the satisfaction of a debt, such as investigation into the whereabouts of a debtor and his/her property, demands to pay a debt, and the receipt of payments from a debtor;
5. The term "personal information" means the personal information defined in subparagraph 1 of Article 2 of the Personal Information Protection Act;
6. The term "credit information" means the credit information defined in subparagraph 1 of Article 2 of the Use and Protection of Credit Information Act.
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 Article 3 (Responsibilities of State and Local Governments)   print
(1) The State and each local government shall prepare systems and conditions for the solid establishment of fair practices in debt collection and implement a policy therefor.
(2) The State and each local government shall endeavor to protect debtors and their related persons from any debt collector who abuses his/her rights or commits an unlawful act in debt collection.
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 Article 4 (Relations to other Acts)   print
Except as expressively provided for in any other Act, debt collection shall be governed by this Act.
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 Article 5 (Issuance of Debt Certificates)   print
(1) Every debt collector (limited to the persons specified in subparagraph 1 (a) of Article 2; hereafter the same shall apply in this Article) shall, upon receiving a request from a debtor to issue a document certifying a debt (hereinafter referred to as "debt certificate"), such as the principal, interest, expenses, and payment term, comply with the request, unless there is any justifiable reason to the contrary.
(2) Every debt collector may demand a debtor to reimburse the expenses directly incurred in issuing a debt certificate within the scope prescribed by Presidential Decree. <Amended by Act No. 11164, Jan. 17, 2012>
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 Article 6 (Notification of Delegation)   print
(1) Any debt collector (referring to any person specified in subparagraph 1 (c) of Article 2 or a person who collects debts for any person specified in the aforesaid item in the scope of employment, contract, delegation, or whatsoever the cause; hereafter the same shall apply in this Article) who is delegated by a creditor to collect a debt shall notify the relevant debtor of the following matters in writing (including an electronic document under subparagraph 1 of Article 2 of the Framework Act on Electronic Documents and Transactions): Provided, That the same shall not apply to the cases where a debtor consented that such notification is unnecessary: <Amended by Act No. 11461, Jun. 1, 2012>
1. The name, designation, or contact information of the debt collector (including the name and contact information of the debt collection officer, if a debt collector is a corporation);
2. Matters concerning the debt, such as the name or designation of the creditor, the amount of the debt, and the duration of default on payments of the debt;
3. Matters concerning a payment account, such as the payment account number and the name of the account holder.
(2) If the agreement under which a debt was incurred includes an acceleration clause, notice shall be given immediately after the debtor forfeits the benefit of time, notwithstanding paragraph (1).
(3) If the agreement under which a debt was incurred is for the continuous provision of services, notice shall be given immediately upon termination of the agreement due to non-repayment of the debt, such as delay in payments of service fees, notwithstanding paragraph (1).
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 Article 7 (Prohibition against Multiple Delegation of Debt Collection for Single Debt)   print
No debt collector shall delegate debt collection to two or more persons simultaneously for a single debt.
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 Article 8 (Prohibition against Registration of Information about Non-Repayment of Debt)   print
No debt collector (referring to any person specified in subparagraph 1 (a) or (c) of Article 2 or a person who collects debts for any person specified in the aforesaid items in the scope of employment, contract, delegation, or whatsoever the cause is; hereafter the same shall apply in this Article) shall register a debtor as a defaulting debtor with the credit information concentration institution or on the electronic credit information system of a credit information business operator under the Use and Protection of Credit Information Act, if a lawsuit filed by the debtor to contest the existence of the debt is still pending. In such cases, if such debtor has been already registered as a defaulting debtor, the relevant debt collector shall delete the registration of the defaulting debtor within 30 days from the day on which he/she becomes aware of the fact that a lawsuit filed to contest the existence of the debt is still pending.
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 Article 9 (Prohibition against Violence and Threats)   print
No debt collector shall commit any of the following acts in connection of debt collection:
1. Committing assault and battery on, threatening, arresting, or confining a debtor or his/her related person or using fraud or physical force upon a debtor or his/her related person;
2. Seriously disturbing privacy or peace in business by repeatedly or at nighttime (referring to the duration beginning at nine O'clock in the evening and ending at eight O'clock the next morning; hereinafter the same shall apply) paying visits to a debtor or his/her related person without any justifiable reason, to arouse fear or apprehension;
3. Seriously disturbing privacy or peace in business by repeatedly or at nighttime delivering words, writings, sound, images, or goods by phone or any other means without any justifiable reason to arouse fear or apprehension;
4. Informing any person other than a debtor (including a guarantor, notwithstanding subparagraph 2 of Article 2) of untrue facts;
5. Seriously disturbing privacy or peace in business by coercing a debtor or his/her related person to prepare money for repaying a debt by borrowing money or in any similar way to arouse fear or apprehension;
6. Seriously disturbing privacy or peace in business by repeatedly demanding any person, other than a debtor, who does not owe any legal obligation to repay a debt on behalf of a debtor to arouse fear or apprehension.
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 Article 10 (Prohibition against Divulgence of Personal Information)   print
(1) No debt collector shall divulge credit information or personal information known to him about a debtor or his/her related person in connection with the incurrence of a debt or debt collection to any other person or use such information for any purpose other than debt collection.
(2) Providing credit information or personal information by a debt collector in accordance with any other Act is not deemed the divulgence or use under paragraph (1).
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 Article 11 (Prohibition against Misrepresentation)   print
No debt collector shall commit any of the following acts against a debtor or his/her related person in connection of debt collection:
1. Expressing his/her intent to collect any invalid or non-existent debt;
2. Using any words, writing, sound, image, goods, or any other sign misleading someone to believe that an act is conducted by a court, public prosecutors' office, or any other State agency;
3. Misrepresenting legal authority or status for debt collection;
4. Misrepresenting that legal proceedings, civil or criminal, are pending in connection with debt collection, although such proceedings are not pending;
5. Using the name of any other person or organization without due authority for debt collection.
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 Article 12 (Prohibition against Unfair Conduct)   print
No debt collector shall commit any of the following acts in connection with debt collection:
1. Publicly expressing his/her intent to collect a debt, to a debtor or his/her related person, by taking advantage of any situation in which a debtor has difficulties in responding to debt collection, such as a wedding ceremony or funeral;
2. Inquiring of any person related to a debtor about the debtor's whereabouts or contact information, how to find the debtor's whereabouts, or any similar information, although he/she has no difficulty in finding the debtor's whereabouts because of the interruption of contact with the debtor or due to any other reason;
3. Incurring telecommunications expenses on a debtor's account by making collect calls or in any other way without a justifiable reason;
4. Repeatedly demanding to repay a debt in any way other than the proceedings prescribed by relevant Acts and subordinate statutes, knowing that the debt has been fully or partially discharged by the proceedings for rehabilitation, bankruptcy, or personal rehabilitation under the Debtor Rehabilitation and Bankruptcy Act;
5. Making the fact of indebtedness known to any person other than the debtor by demanding the repayment of a debt by postcard or in any other way.
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 Article 13 (Prohibition against Demanding Unreasonable Expenses)   print
(1) No debt collector shall demand a debtor or his/her related person to pay expenses incurred in debt collection for which the debtor is not liable or to pay expenses in excess of the amount actually incurred.
(2) Necessary matters concerning paragraph (1) shall be prescribed by Presidential Decree.
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 Article 14 (Liability for Damage)   print
Any debt collector who has inflicted damage on a debtor or his/her related person in violation of this Act shall be liable for the damage: Provided, That the same shall not apply to cases where a debt collector is a business operator (referring to any person specified in subparagraph 1 (a) or (c) of Article 2 or a person who collects debts for any person specified in any of the aforesaid items in the scope of employment, contract, delegation, or whatsoever the causes; hereinafter the same shall apply ) and the business operator proves that such damage has not been caused by any intentional or negligent act of the business operator.
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 Article 15 (Penal Provisions)   print
(1) Any person who commits assault and battery on, threatens, arrests, or confines, or uses fraud or physical force on a debtor or his/her related person shall be punished by imprisonment with prison labor for not more than five years or by a fine not exceeding 50 million won.
(2) Any person falling under any of the following subparagraphs shall be punished by imprisonment with prison labor for not more than three years or by a fine not exceeding 30 million won:
1. A person who violates any provision of subparagraphs 2 through 6 of Article 9;
2. A person who divulges credit information or personal information of a debtor or his/her related person, or who uses such information for any purpose other than debt collection, in violation of Article 10 (1);
3. A person who expresses his/her intent to collect a debt in violation of subparagraph 1 of Article 11.
(3) Any person who uses words, writings, sound, images, goods, or any other sign in violation of subparagraph 2 of Article 11 shall be punished by imprisonment with prison labor for not more than one year or by a fine not exceeding ten million won.
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 Article 16 (Joint Penal Provision)   print
If the representative of a corporation or an agent, an employee, or a servant of a corporation or a private individual committed an offense under Article 15 in the scope of the business of the corporation or the private individual, not only shall such an offender be punishable accordingly, but the corporation or the private individual shall also be punished by the fine prescribed in the relevant Article: Provided, That the same shall not apply to cases where a corporation or a private individual had not neglected reasonable care and supervision in connection with the relevant business in order to prevent such offense.
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 Article 17 (Fines for Negligence)   print
(1) Any person falling under any of the following subparagraphs shall be punished by a fine for negligence not exceeding 20 million won:
1. A person who fails to comply with a request for issuing a debt certificate in violation of Article 5 (1);
2. A person who violates subparagraph 1 or 2 of Article 12;
(2) Any person falling under any of the following subparagraphs shall be punished by a fine for negligence not exceeding ten million won: <Amended by Act No. 11461, Jun. 1, 2012>
1. A person who fails to notify the fact that he/she was delegated by a creditor to collect a debt (including an electronic document under subparagraph 1 of Article 2 of the Framework Act on Electronic Documents and Transactions) in violation of Article 6;
2. A person who delegates debt collection to two or more persons for a single debt in violation of Article 7;
3. A person who registers a debtor as a defaulting debtor, although a lawsuit to contest the existence of a debt is pending, or who did not delete the registration of a defaulting debtor within 30 days, knowing that such lawsuit is pending, in violation of Article 8;
4. A person who violates any provision of subparagraphs 3 through 5 of Article 11;
5. A person who demands expenses incurred in debt collection in violation of Article 13.
(3) Any person who violates any provision of subparagraphs 3 through 5 of Article 12 shall be punished by a fine for negligence not exceeding five million won.
(4) If any person falling under paragraph (1) 2, (2) 2, 4, 5, or (3) is not a business operator, the fines for negligence prescribed in the applicable provision shall be reduced by 1/2 of the applicable maximum amount.
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 Article 18 (Imposition and Collection of Fines for Negligence and Delegation of Authority)   print
(1) Fines for negligence under this Act shall be imposed and collected by the supervisory agency who has granted authorization or permission to, or accepted registration of, the person subject to the fines for negligence, if such agency is involved, or otherwise by the Special Metropolitan City Mayor or the competent Metropolitan City Mayor, Do Governor, or Governor of a Special Self-Governing Province, as prescribed by Presidential Decree.
(2) Any supervisory agency under paragraph (1) may delegate part of its authority for the imposition and collection of a fine for negligence to the head of each Si/Gun/Gu, as prescribed by Presidential Decree.
ADDENDA
Article 1 (Enforcement Date)
This Act shall enter into force six months after the date of its promulgation.
Article 2 (Applicability to Notification of Delegation)
Article 6 shall apply to debt collection delegated by a creditor on or after this Act enters into force.
Article 3 (Applicability to Prohibition against Multiple Delegation of Debt Collection for Single Debt)
Article 7 shall apply to debt collection delegated on or after this Act enters into force.
Article 4 (Transitional Measure concerning Penal Provisions and Fine for Negligence)
In applying penal provisions to, or imposing a fine for negligence for, any act committed before this Act enters into force, such act shall be governed by the previous corresponding provisions.
Article 5 Omitted.
ADDENDA <Act No. 10465, Mar.. 29, 2011>
Article 1 (Enforcement Date)
This Act shall enter into force six months after the date of its promulgation. (Proviso Omitted.)
Articles 2 through 7 Omitted.
ADDENDUM <Act No. 11164, Jan.. 17, 2012>
This Act shall enter into force six months after the date of its promulgation.
ADDENDA <Act No. 11461, Jun. 1, 2012>
Article 1 (Enforcement Date)
This Act shall enter into force three months after the date of its promulgation.
Articles 2 through 10 Omitted.