Over two million people around China have fallen prey to a scam in which they were offered free Huawei products, only to have to pay excessive fees for delivery and handling.
Users said they had seen an offer for Huawei’s wearable band on what they thought was the company’s website, and signed up, according to The Paper (in Chinese). Once the products were delivered, they were required to pay RMB 29 for logistics, storage, and labor, filling the fraudsters coffers. Upon opening the device, it became clear that the plastic product, which cost a few yuan to produce, was counterfeit.
The scammers, who were based in Harbin, made a total of RMB 80 million from the operation. According to a police investigation, they had run similar schemes since 2015 by offering free clothes, shoes, and watches to unsuspecting victims, who were then later forced to pay delivery fees. However, from June 2018 they moved on to Huawei bands. Since then the group expanded rapidly, employing hundreds to keep up with the demand, before being shut down.
This is not an isolated case—users of online services are facing increasing rates of fraudulent activity, according to a report released in February by Tencent. The company found that, with regards to telecom fraud, the total number of cases grew 89% between 2017 Q4 and 2018 Q1. While the average loss per case dropped, the highest losses from a single case exceeded a record-breaking RMB 10 million, with e-commerce accounting for the most significant share of the losses.
WeChat has also become a popular platform for scams. In August, Zhejiang’s Provincial Bureau of Industry and Commerce (ZBIC) censured Tencent after numerous incidents in which WeChat Pay users were defrauded by individuals pretending to their WeChat friends. The strong performance of mini programs has§ also attracted the attention of fraudsters.
Other tech giants have also found themselves in hot water for allegations of advertising and P2P lending fraud. Xiaomi was forced to pull ads after it was alleged that they were promoting fraudulent financial services, while Toutiao faces similar claims. Additionally, JD.com faced scrutiny after suspected large-scale fraud involving Feixun (斐讯), a brand sold on JD’s platform, was uncovered.