The Supreme Court ruled that if a loan broker used a customer's name to obtain a double loan, that customer is not obligated to repay the loan to the financial institution. It also noted that the financial institution has a responsibility for neglecting to verify the identity.
On the 6th, the Supreme Court's second division (Chief Justice Oh Kyung-mi) announced that it confirmed the ruling of the appellate court that ruled against Orix Capital (Orix), a second-tier financial institution specializing in installment financing, in a lending lawsuit filed against a person surnamed Kim. Kim is a victim of an identity theft incident orchestrated by a loan broker.
A loan broker refers to a loan consultant who enters into a consignment contract with a financial institution and performs tasks such as loan application counseling, reception, and delivery. Orix entrusted the loan brokering duties to HumanTree, a company specializing in loan brokerage.
However, it was found that loan brokers affiliated with HumanTree had obtained double loans amounting to 3.457 billion won by using the names of 15 Orix customers from October 2018 to August 2019. Three loan brokers were charged with fraud, resulting in one receiving a three-year prison sentence while two others received two-year sentences, confirmed in 2021.
Unable to receive the loan amount from the loan broker, Orix filed a civil lawsuit against the victims whose identities had been used. The Civil Act includes a provision stating that if a third party has a legitimate reason to believe that an agent has been authorized by the original name holder to exercise authority, the name holder is responsible for the actions of the agent.
The first instance ruled in favor of Orix. The court stated, "There were no special circumstances to doubt the credibility of the contract documents submitted by the loan broker," concluding that it was difficult for Orix to suspect that the loan broker would obtain double loans using the customer's name.
However, the appellate court canceled the first instance's ruling and issued a judgment against Orix. The court found that Orix had neglected its duties to verify the identity of the customer and manage the loan broker.
The Supreme Court also held that Orix bears responsibility for failing to properly exercise its supervisory duties during the loan execution process, reaching the same conclusion as the appellate court.