Chinese Student Receives 10-Year Jail Term for JD.Com Fraud – Yicai Global
What happened: A court in the central China province of Hunan has sentenced a college student with the surname Wang to more than 10 years of imprisonment and fined him RMB 80,000 (around $11,900) for scamming Chinese online retailer JD.com out of RMB 1.1 million in 2017. Wang, along with accomplices, exploited an identification loophole in JD Finance’s credit payment service, Baitiao, and created multiple fake Baitiao accounts in order to buy electronic devices on credit and resell them online. JD fixed the issue in 2017.
Why it’s important: China has lower credit card market penetration relative to many other economies, but demand for micro-lending has surged in the past five years, especially among younger consumers. Chinese tech giants have launched online lending services to target these segments. JD has its Baitiao service, while Tencent-backed WeBank offers a similar online consumer loan product called Weilidai. Alibaba’s Ant Financial offers a micro-credit service, Huabei, in addition to holding a stake in Qudian, a micro-lending company. However, the booming industry suffers from security issues. More than 200 people have been convicted and sentenced for fraud in cases similar to Wang’s, according to data from the China Supreme Court website.