0

How Korean business people behave when customers data is breached.

(6th LD) Bank officials quit en masse over massive data leak

How Korean business people behave when customers data is breached.

Image courtesy of [sheelamohan] / FreeDigitalPhotos.net

Top executives at a bank and credit card firms tendered their resignations on Monday as the finance industry tried to rein in havoc from the latest massive leak of client data that regulators say may have affected roughly half of the country’s 50 million people.

Fears that the information fell into the hands of scammers escalated as reports were coming in of suspicious and unintended financial transactions, despite earlier statements by the firms that the culprits of the leak were caught before the information was distributed.

Their resignations came hours after the country’s financial regulator warned of stern punitive measures against financial institutions and their chiefs if the latest leak turned out to be a result of their management failure.

Personal data, including bank account numbers, addresses and credit ratings of some 20 million bank clients have been leaked, according to the estimate by the Financial Supervisory Service (FSS). Part of the leak occurred at local banks that shared their customer data with their affiliated credit card firms, such as KB Kookmin, Nonghyup and Lotte. Customers and authorities are most concerned that the information may have gone to financial scammers.

“Their parent firms seem to be taking a step back (from the issue) and not showing any kind of responsible attitude,” Gov. Choi Soo-hyun of the FSS was quoted as saying in a meeting with his staff. “We will hold them fully responsible for the data leak if their sharing of client data among affiliates and lax internal control turn out to be the cause.”

Shin Je-yoon, chairman of the regulatory body Financial Services Commission, bows in apology on Jan. 20, 2014 during a meeting with ruling party legislators for not taking preemptive measures to prevent a massive data leak. (Yonhap)

In December, personal data of some 130,000 customers of Standard Chartered Bank Korea and Citibank Korea were also stolen, the largest number in the history of the banking sector in South Korea.

The revelation caused a stir over the weekend, with angry clients logging on to the websites of the financial institutions to check whether their confidential data had been stolen.

Cardholders, concerned about possible fraud, also have been scurrying to apply for new plastic cards, with more than 180,000 applications received for the three card firms as of 4 p.m., a jump from the daily average of 30,000 cases.

According to industry sources, some cardholders have already reported a series of unintended credit card charges and claimed that they are from the data leak. But it was not definitively clear whether there is a link, the sources said.

The three card firms said they would fully cover any financial losses suffered by their customers from scams linked to the data leak.

“We will take any legal and moral responsibility for the cases of the personal information leak,” they said in a statement.

Hours after their joint press conference earlier in the day, however, the chiefs of the three card firms offered to resign amid mounting criticism that their follow-up measures to the largest-ever data leak are insufficient and inadequate.

Top executives at KB Financial Group Inc. and its mainstay banking unit Kookmin Bank also offered their resignation en masse to take responsibility for the security lapses.

Senior executives of three credit card issuers bow their heads in apology for a massive leak of confidential data of clients

Customers filed lawsuits on Monday against the three credit card firms, seeking a total of 110 million won in compensation.

Read More