Illegal Investment Advice Schemes Surge: Over $1 Billion Lost in Two Years
Illegal Investment Advice Schemes Surge, Resulting in $1 Billion in Losses Over Two Years
Reports of illegal investment advice schemes have surged in the past two years, emerging as a serious social problem. According to data from the National Police Agency, there were a total of 14,629 reports related to illegal investment advice schemes from September 2023 to September 2025, with estimated damages amounting to approximately $1 billion. This highlights the urgent need for investors to exercise caution, as well as for the government to implement strong crackdowns and preventive measures. In particular, illegal investment advice schemes, which are spreading rapidly online, frequently lure investors with the promise of high returns, causing financial harm. This necessitates heightened awareness among investors. Such illegal activities not only result in individual financial losses but also undermine public confidence in investment across society.
Recognizing the severity of these illegal investment advice schemes, the National Office of Investigation of the National Police Agency launched a special crackdown on illegal activities related to 'investment advice schemes' in September 2023. While efforts are being made to eradicate illegal activities through intensive crackdowns, the increasingly sophisticated nature of criminal methods poses challenges to law enforcement. In fact, while over 12,000 cases have been apprehended, involving 5,181 individuals, many illegal investment advice schemes remain active, underscoring the importance of continued crackdowns and voluntary reporting by investors. Furthermore, the police plan to impose severe penalties not only on operators of illegal investment advice schemes but also on recruiters who entice investors and facilitators involved in illegal money laundering.
Recently, a more serious problem has emerged: large-scale criminal organizations operating in countries such as Cambodia, Laos, Thailand, and the Philippines are luring Koreans, detaining them, and forcing them to participate in online scams. These organizations are reportedly using social media and online communities to offer high-paying part-time jobs, luring Koreans overseas, confiscating their passports, and forcibly involving them in the operation of illegal investment advice schemes. Criminal organizations operating abroad are exploiting the difficulties in conducting international cooperative investigations to commit crimes more boldly, leaving victims facing not only financial losses but also physical and psychological harm. The Korean National Police Agency plans to strengthen cooperation with international investigative agencies such as Interpol to expand investigations into overseas illegal investment advice schemes and make multifaceted efforts to support victims.
Meanwhile, the police have been separately tracking 'romance scams' (fraud disguised as romance) since February 2024. This involves approaching someone online, building a friendly relationship, and then requesting money. Victims suffer significant financial losses due to the exploitation of their emotional attachments. In the 1 year and 8 months since February 2024, 2,830 romance scam cases have been reported, with damages amounting to $167.5 million. Romance scams are often difficult for victims to recognize as fraud, and they are often reluctant to report them due to personal feelings, suggesting that the actual extent of the damage is likely even greater. The police urge caution regarding online relationships and advise against complying with requests for money to prevent romance scam victimization.
Rep. Heo Young, a member of the National Assembly's Strategy and Finance Committee, received and analyzed related data from the National Police Agency, pointed out the seriousness of the illegal investment advice scheme problem, and urged the government to take active measures. Rep. Heo Young emphasized that "Illegal investment advice schemes are malicious criminal acts that plunder the assets of ordinary people, and young people and the elderly are particularly vulnerable." He argued that "The government must not only strengthen crackdowns to eradicate illegal investment advice schemes but also expand victim prevention education and promotion and strengthen victim support systems." He also added, "As illegal investment advice scheme crimes targeting Koreans are increasing overseas, we must strengthen investigations into overseas criminal organizations in cooperation with related ministries such as the Ministry of Foreign Affairs and establish an international cooperation system to protect victims." The Korean government and the National Assembly have promised to continue to pay attention to and make efforts to eradicate illegal investment advice schemes.
