Is it fraud if someone can't repay? The test lies in the day the money was borrowed

“The person who borrowed money from me has cut off contact. If I file a fraud complaint, will I get it back?” This is one of the questions we hear most often on consultation calls. From the other side, we hear people complain that they are being treated as fraudsters when they were only late because their business was struggling. This happens because the two sides are looking at different points in time in the same case.

The clock for fraud stops on the day the money was received

Fraud requires an act of deception, the other person being deceived into handing over money, and a resulting gain. So rather than the later outcome of non-payment, what matters is whether, on the day the money was received, there was an intention and ability to repay. If circumstances worsened after the money was received and it could not be repaid, it is in principle a civil matter.

Investigators compare the borrower's income and assets at that time, how much other debt they had, what they said the money was for, and where it was actually spent. If they said it was for hospital bills but spent it on something else, or if they hid that their debts had already piled up to the point where repayment was difficult, the case leans toward fraud.

Conversely, if the borrower explained the business and its risks as they were when receiving the money, and actually put the money into that business, it is hard to say they deceived anyone even if the outcome was bad. This is why, in investment cases, the business plan and the record of how the funds were used are laid side by side and compared.

What a record of partial repayment tells

Repaying part of the money does not rule out fraud, because the test is the point at which the money was received. However, a record of steadily sending interest and explaining the situation is circumstantial evidence that there was no intention to deceive from the start, and it is also taken into account as restitution.

If you are the one accused, the first step is not to rely on memory but to gather bank transaction records, messages exchanged at the time and business-related contracts in date order. Dated materials carry far more weight than verbal explanations.

News of a higher statutory penalty: it depends on when the conduct took place

With the amendment to the Criminal Act on December 23, 2025, the statutory penalty for fraud became imprisonment for up to 20 years or a fine of up to 50 million won. However, the Criminal Act in principle punishes conduct under the law in force at the time of the act (Article 1 of the Criminal Act), so the previous statutory penalty applies to cases where the money was received before then. Here too, the date the money changed hands is the standard.

If the amount gained is 500 million won or more, the Act on the Aggravated Punishment of Specific Economic Crimes (특정경제범죄법) applies and there is no longer a path to ending with a fine. Since the amount can differ depending on whether money received in several installments is treated as one or separately, it is necessary to calculate it transaction by transaction.

A complaint does not collect the money for you

There is something victims should know. Criminal proceedings exist for punishment, so filing a complaint alone does not get your money back. If the other party still has assets, you need to consider provisional attachment (가압류) and a claim for damages together to have a chance of recovering it. Sometimes the other party repays during the investigation to reach a settlement, but that is entirely up to them.

In cases where it is unclear whether it is fraud or a civil matter, rushing to file a complaint can end in a finding of no charges (혐의없음) with only time lost. It is better to decide which path is right after first laying out the materials from the day the money changed hands.