14.Case on Prohibition of Transfer of Cash Cards etc. and Criminal Punishment of its Violation

[23-2(A) KCCR 95, 2010Hun-Ba115, July 28, 2011]

In this case, the Constitutional Court unanimously held that the parts of two provisions at issue, the part of 'transfer of access devices' of Article 6 Section 3 of the former Electronic Financial Transactions Act which prohibits the transfer of access devices, such as cash cards, and the part of 'transfer of means access devices' of Article 49 Section 5 Item 1 of the above Act which imposes punishment on the violators of Article 6 Section 3 of that Act, are not against the Constitution. The Court found that the former provision does not infringe on the freedom of contract, the rights to property or equality of the owners of the access devices and that the latter provision does not go beyond the limits of legislative discretion in defining crimes and selecting statutory sentences for those crimes.

Background of the Case

Petitioner received a summary order for violation of the Electronic Financial Transactions Act (hereinafter, the "Act") by transferring access devices for electronic financial transactions to others when, around August 21, 2008, he opened nine savings books and from banks including ○○NH Bank and sold them, as well as the cash cards to an anonymous person. The petitioner applied for a formal trial and, while the case was pending, moved the court to file a request with the Constitutional Court for a constitutional review of the provisions at issue, Article 6 Section 3 of the above Act which prohibits the transfer of access devices, such as cash cards and Article 49 Section 5 Item 1 of the Act which imposes punishment on the violators of the Article 6 Section 3 of the Act. Upon the court's dismissal, the petitioner filed this constitutional complaint.

Provision at Issue

Former Electronic Financial Transactions Act (revised by Act No.7929 on April 28, 2006, but before revised by Act No.9325 on December 31, 2008)

Article 6 (Selection, Use and Management of Means of Access)

(3)No one shall transferor acquire themeans of accessor provide for the means of access subject to a right of pledge unless specifically provided for in other: Provided, that the same shall not apply to cases where such transaction is necessary in order to transfer or offer as security the electronic pre-paid payment device under Article 18 or electronic cash.

Article 49 (Penal Provisions)

(5)Any person who falls under any of the following subparagraphs shall be punished by imprisonment of not more than one year or by a fine not exceeding ten million won:

1.Any person who has transferredor acquired the means of access, or provided for the means of access subject to a right of pledgein violation of Article 6 Section 3.

Summary of Decision

The Court unanimously held that the parts of two provisions at issue, the part of 'transfer of access devices' of Article 6 Section 3 (hereinafter, the "Prohibition Provision") of the former Electronic Financial Transactions Act which prohibits the transfer of access devices and the part of 'transfer of access devices' of Article 49 Section 5 Item 1 (hereinafter, the "Punishment Provision") of the former Act which imposes punishment on the violators of the Article 6 Section 3 of the former Act, are not against the Constitution.

1. Decision on the Prohibition Provision

A.Whether the Prohibition Provision infringes on the freedom of contract or the right to property

For the aim of promoting financial conveniences for people and developing the national economy by ensuring the soundness and reliability of electronic financial transactions, the Prohibition Provision, in principle, bans transferring of access devices which is more likely to be used to commit crimes such as wire fraud. These purposes are legitimate and the means to achieve them is considered to be proper. The means also satisfy the least restrictiveness principle since the transfer of access devices is permitted when such transfer is necessary for the transfer or the offer as security of the electronic pre-paid payment device or electronic cash, or when the transfer is allowed by legislation out of necessity or otherwise. The Prohibition Provision, in addition, balances the interests concerned. While it pursues the national public interest in preventing any harm to the stability or reliability of electronic financial transactions, the transfer of access devices is merely to gain private profits and thus, does not constitute an essential right of individuals. Therefore, we cannot find that the Prohibition Provision infringes on the freedom of contract or right to property of the owners of the access devices.

B.Whether the Prohibition Provision infringes on the right to equality

Electronic prepayment means or electronic currencies are means of payment by electronic methods, so transferring access devices or providing for access devices subject to a right of pledge is necessary in order for the electronic prepayment means or electronic currenciesto be transferred or be offered as security. Therefore, in such instances,the transfer or the offer of the access devices as security is permitted under the agreement with the issuer. Moreover, if the access device is transferred or provided for subject to a right of pledge to the same person to whom the electronic prepayment means or electronic

currencies is transferred or offered as security, there is no fear of harm to the stability or reliability of electronic financial transactions. On the contrary, there is a great concern that the allowance of transfer of access devices without any restriction would damage the stability or reliability of electronic financial transactions because the transfer can be used in crimes such as wire fraud and thus, such transfer shall not be permitted unless any other statutory provision specifically requires. The Prohibition Provision, therefore, is not deemed to infringe on the petitioner's right to equality because, unlike the instances where an electronic prepayment means or electronic currencies are to be transferred or offered as security, there is a reasonable ground for its prohibition when there is no other statutes requiring otherwise.

2. Decision on the Punishment Provision

It would be difficult for those who violate the Prohibition Provision by transferring access devices to avoid criticism that they damage the stability or reliability of electronic financial transactions and disturb the order of transaction only for the sake of their own interests. The situation is not different even in cases where the transfer is due to a serious economic hardship. In reality, the persons to whom the access devices are transferred commit bank fraud including so-called voice phishing and the number of victims is growing so much that, a mere imposition of administrative punishments such as a charge of fine, cannot be expected to have any regulatory effect on the transfer of access devices. In light of the nature of crime, it is also hard for the Court to conclude that the Punishment Provision strikingly is off balance under the criminal justice system, because the statutory punishment prescribed by the provision–imprisonment of "not more than" one year or a fine "not exceeding" ten million won–is not too severe considering the nature of the crime and the responsibilities of violators. Therefore, we cannot regard that the Punishment Provision goes beyond the limits of legislative discretion in defining a crime and choosing a punishment because that provision does not violate the principle of proportionality between punishment and responsibility.