According to data from China’s Ministry of Public Security, the country has handled 594,000 online and phone scams as of July 2022. Earlier in 2021, authorities stopped a scam that defrauded 1.5 million people of a total of 329.1 billion yuan ($47.5 billion).
Scammers often work in teams, using prepared scripts to gain the trust of victims through online chat, before luring them into “seemingly legitimate” investment products, often cryptocurrencies.
The lack of a legal framework to prevent the leakage of personal information, as well as previous management loopholes that allowed telecom operators to sell SIM cards without checking identity documents, have made it easy for scammers to "run rampant". Violations by bad actors have caused hundreds of billions of dollars in damage, even leading to some suicides.
In December 2022, Beijing passed a law to combat telephone scams and online fraud, empowering enforcement agencies to pursue suspects overseas and requiring telecom companies and banks to help track down scammers.
Online scams abound
Phone scams have been increasing at an annual rate of 20% to 30% since 2016, according to Xinhua . Xie Ling, a member of the telecommunications fraud research team at the School of Criminal Investigation at Southwest University of Political Science and Law, said the prevalence of online scams is partly due to insufficient punishment.
Since 2020, when the Covid-19 pandemic broke out and the economy weakened, online fraud has increased. Therefore, China has gradually built a strategy of suppression and prevention, with prevention being the focus.
Also in 2020, there were nearly 1 million phone and internet scams across China, causing losses of 35.37 billion yuan and leading to the arrest of 361,000 suspects. The frauds involved not only money transfer fraud, but also personal information trading, human smuggling, document forgery and other acts.
Caixin , a Chinese financial and economic website, reports that the underground information market is thriving, collecting all kinds of personal data such as ID numbers, business addresses, and even government agency data, and then selling it to targeted marketers and scammers. For example, one source said he could provide all kinds of information, including contact lists of university professors and IDs and phone numbers of senior citizens, who are among the most vulnerable to online fraud.
Not only that, scammers also use devices that disrupt and spoof telecommunications signals, allowing them to change the caller ID to trick victims into thinking the call is official. In addition, bad guys also use software to spread mass text messages under the name of network operators, banks or organizations.
Operation "iron hand"
In 2020, Beijing launched a nationwide “card busting campaign” to crack down on illegal transactions and sales of bank cards. Accordingly, mobile phone SIM cards and bank cards that are not registered to the owner will have their services canceled.
In early 2021, China continued to introduce a lenient policy, allowing citizens living in border areas with Myanmar, many of whom participated in online and telephone fraud rings, to return home ahead of schedule.
Recently, Chinese criminal gangs have been moving into Southeast Asian countries such as Myanmar, Laos and Thailand. They recruit Chinese citizens with “high salaries” and smuggle them across borders, then detain and abuse the victims abroad.
The new rules also require banks, telecommunications and Internet service providers to collect information about potential fraudulent activities and take action based on the level of risk. For example, police can ask banks to refuse transactions or freeze accounts when they identify potential victims who will or have transferred money to criminals.
Meanwhile, the law requires civil education institutions to develop awareness-raising programs for vulnerable groups such as the elderly and youth.
To prevent overseas scams targeting domestic citizens, Beijing allows immigration authorities to impose exit bans on those who have visited overseas online scam “black spots” or those found to be involved in phone or online scams while abroad.
(According to Nikkei Asia)
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