'Elderly and dementia patient alert service' targeted for launch by year-end

Account holders and family members must register with bank in advance

Measure aims to curb voice phishing targeting dementia money, elderly assets

60-plus age group accounted for 40% of voice phishing victims in Q1

[Image created using Gemini]
[Image created using Gemini]

Kim Deok-su, an 86-year-old man, says he still cannot forget what happened last June.

A man called out of nowhere, claiming to be a prosecutor at a regional district prosecutors office, and urgently told Kim that a bank employee had colluded with a postal worker using his personal information to open a post office credit card.

When Kim expressed alarm, the man told him that the bank employee could siphon off his deposits and instructed him to withdraw all his savings and hand them over. The caller even provided specific instructions: put the cash in a bag and leave it in front of the first-floor mailbox of his apartment building, and someone would come to collect it.

Determined not to lose the money he had saved over a lifetime, Kim rushed to his bank and withdrew all 16 million won ($11,800) he had accumulated. He then followed the instructions, placed the cash in a bag and left it by the mailbox before returning home. Shortly afterward, a man appeared and took the bag — a member of the voice phishing ring that had called him. Kim lost every won he had saved. It was a textbook case of impersonation-style voice phishing.

Going forward, when elderly people or dementia patients withdraw deposits above a certain threshold, banks will notify a pre-designated family member of the transaction. Any suspicious activity flagged by the bank's fraud detection system will also be included in the alert. Financial authorities have drawn up the new safeguard in response to a surge in fraud targeting so-called "dementia money" and elderly assets.

Financial authorities and the country's five major banks — KB, Shinhan, Hana, Woori and NH NongHyup — are preparing to launch an "elderly and dementia patient alert service" as early as year-end, according to financial industry sources Wednesday.

Under the service, when an account holder aged 65 or older, or a dementia patient with a legal guardian, withdraws deposits above a set amount, a pre-designated family member will be notified. If the bank's fraud detection system flags the transaction as suspicious — for instance, when deposits are withdrawn repeatedly over a short period — that information will also be included in the alert.

The service will be available only to those who sign up for it. Both the account holder and the family member must clearly express in advance their consent to receive withdrawal notifications from the bank.

Under the Financial Real Name Act and related regulations, financial institutions may share transaction information with a third party with the account holder's consent. However, it remains legally unclear whether that consent applies only to individual transactions or extends to blanket authorization covering all transactions.

In response, financial authorities have decided to pilot the service through the financial regulatory sandbox — a framework that temporarily exempts innovative financial services from existing regulations or grants them special exceptions. The five major banks plan to submit their sandbox applications to the authorities by the end of this month.

Because family members will be able to learn of a withdrawal in real time, voice phishing losses targeting the assets of dementia patients and the elderly are expected to fall sharply.

"Based on the bank's alert, the account holder and family members will be able to assess whether voice phishing is involved," a bank official said. "In that case, the account holder can request the bank to suspend payment on the recipient account, preventing further losses."

Protecting "dementia money" — assets held by dementia patients — is one of the government's national policy priorities. According to the government, dementia money totaled around 172 trillion won as of late last year, and the figure is estimated to be far higher when the assets of elderly people without dementia are included. With voice phishing fraud targeting those assets on the rise, the alert service is seen as part of the follow-up measures to that national agenda.

Recent voice phishing data confirm that the elderly bear the brunt of such crimes. Data submitted by the Financial Supervisory Service to the office of People Power Party Rep. Seo Il-jun, a member of the National Assembly's Political Affairs Committee, show that people aged 60 and older accounted for 40 percent of the 9,788 voice phishing cases recorded in the first quarter of this year.

Among those, 42 percent of the 6,769 investment fraud cases — scams disguised as stock-picking or investment advisory services — involved victims aged 60 or older. For impersonation-style fraud of the kind that ensnared Kim, 32.8 percent of the 1,140 cases involved elderly victims.


hyuk@heraldcorp.com