Scams via fake Kakao Talk business channels on the rise

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New online fraud scams are surging, this time by impersonating businesses and using impersonated business accounts on Kakao Talk, a messaging application widely used in South Korea. As the number of victims continues to grow, Kakao Corp., the app operator, is facing criticism for not enhancing the authentication process required to create these accounts.

As of Thursday, Kakao Talk fraud victims are easily found. They are tricked into sending money when attempting to buy products via impersonated Kakao Talk business accounts or, more frequently, when seeking after-sales service through these accounts. The fraudsters’ scheme involves telling victims who contact them for product repairs, assuring them the faulty products will be replaced with new ones, and convincing them to send money before disappearing. These scams are spreading across various types of products, ranging from luxury items to washing machines, air conditioners, and printers, according to the police.

Impersonated company accounts employ tactics such as using the same logo image and adding phrases like “customer service center” or “official” in their profiles. For example, when entering the name of a kitchen appliance company with an annual revenue of 3 billion won ($220) on the messaging app, five impersonated company channels appear in addition to the company’s official account on the app. Consumers who have trouble contacting the official account tend to opt for accounts with the misleading phrases, in a bid to receive quicker assistance but fall victim to scams instead.

Even large companies are falling victim to recent Kakao Talk account scams. Between June and August 2023, global companies like HP Korea Inc., the Korea branch of Koninklijke Philips N.V., and Epson Korea Co. reported cases of financial fraud due to impersonated Kakao Talk accounts, prompting them to issue cautionary notices. In April, the Financial Supervisory Service, the nation’s financial watchdog, issued a consumer alert at the “caution” level due to cases where Kakao Talk accounts impersonated commercial banks and demanded personal information.

Kakao does have preventive measures in place to combat such scams, placing official accounts at the top of the search results and attaching a verification sign to the right side of the account names. Accounts without additional verification are marked as “accounts with unverified business information.” However, all these verification measures that involve document submissions are post-account creation procedures and are not mandatory when creating a business account.

Creating a business account on the app is a simple process, involving only a standard personal verification process, joining the Kakao Business integrated membership, entering the account name and search ID, and checking the business category. Without verification, consumers who contact the account are greeted with a message that says, “Send a message to a consultant.” This can be misleading, making consumers assume it is an official business account.

The app operator has come under fire for this reason, with some saying that Kakao is not taking sufficient action to prevent these scams. Critics argue that Kakao Business serves a clear commercial purpose and thus necessitates stricter business management compared to their open chatroom services.

“Actions causing financial damage to businesses through Kakao Talk account impersonation can be criminal offenses of fraud and business obstruction. Given that borrowed-name bank accounts are often used for these scams, the accounts used in such scams are borrowed-name accounts, and evading IP exposure using bypass servers is common, proactive prevention measures are necessary,” according to the police.

“There seem to be gaps due to the nature of the open platform. We plan to enhance account profile-related authentication by providing business profiles integrated with Kakao authentication. For verified business accounts, we will continuously improve the user environment to make it easier for users to distinguish and recognize them,” Kakao said.