Lotte Card fully resumed operations on Wednesday after a 45-day partial business suspension due to a data breach. As the company restarts issuing new cards and recruiting agents, all eyes are on whether it can reclaim customers lost after the hacking incident and rebuild its damaged reputation.
Financial industry sources reported on Thursday that Lotte Card has reactivated its face-to-face credit card recruitment activities and its online credit card issuance platform, LOCA Partners. The company has also resumed issuing credit, debit, and prepaid cards, as well as processing new card loans.
Last year, Lotte Card suffered a hacking incident that compromised the personal information of 2.97 million customers. As a result, in July of this year, the Financial Services Commission imposed a 1.5-month business suspension and a 50 billion KRW (about 36.2 million USD) fine on the company.
Consequently, from August 1 to September 15, Lotte Card was prohibited from issuing new cards, processing new card loans, and recruiting new credit card members.
During the suspension, Lotte Card prepared for its comeback by restructuring its sales network. While actual recruitment through its online channel, Roca Partners, was halted, the company continued to accept partner applications, provide consultations, and conduct online training and exams.
This strategy allowed Lotte Card to maintain its sales infrastructure, enabling immediate recruitment of new customers once the suspension was lifted.
Lotte Card’s primary challenge now is to rebuild its customer base, which was severely impacted by the data breach.
The Credit Finance Association reports that Lotte Card’s total membership stood at 9.648 million in July, just before the suspension. This figure still falls short of the 9.663 million members it had in August of last year, prior to the incident.
The decline in active card users is even more significant. During the same period, the number of active users dropped from 7.12 million to 6.989 million, a decrease of 131,000.
Moreover, Lotte Card’s inability to acquire new customers during the suspension period has dealt a blow to its operations. The company now faces the critical task of expanding both its new and existing member base.
To address this challenge, Lotte Card plans to diversify its sales channels and launch a variety of new products tailored to customer spending patterns. On the day operations resumed, the company introduced the YBM X DigiRoca card, offering discounts for payments at YBM Language Institute and other affiliated locations.
Additionally, Lotte Card is committed to restoring its corporate image, which was tarnished by the data breach. The company plans to continuously enhance its proactive security measures to prevent future incidents.
Lotte Card has announced a 120 billion KRW (about 86.9 million USD) investment in information security over the next five years. The company aims to increase the proportion of its information technology (IT) budget allocated to information security to 15%. This investment will focus on establishing a sustainable information security management system and enhancing incident response capabilities and cyber resilience.
Furthermore, Lotte Card must address the challenge of restoring profitability after being hit with a 9.6 billion KRW (about 6.9 million USD) fine by the Financial Services Commission and the Personal Information Protection Commission. A Lotte Card spokesperson stated that they’re implementing proactive asset management strategies, diversifying the funding sources, and improving cost efficiency to achieve long-term profitability and strengthen the overall business structure.
