China’s scammers hit victims to the tune of millions as telecoms stand by

BEIJING (Caixin Online) — The recent deaths of two students from the same city in Shandong province who fell victim to phone scammers have led to a public outcry over the failure to enforce privacy laws and the lack of oversight of certain telecom services that have allowed con artists to operate.

Xu Yuyu, an impoverished schoolgirl, died of heart failure on Aug. 19, two days after she lost an entire semester’s worth of college tuition to a scammer who had pretended to be a local education official. Fraudsters told her to transfer money so that she could access her financial aid. Four days later, another college student from Xu’s hometown of Linyi died after falling prey to another con artist who pretended to be a police officer and demanded that the boy repay a bank loan that he had never taken, local media reported.

Calls from tricksters who pretend to be government officials or the police are one of the most common scams in China. On Aug. 29, a lecturer at the prestigious Tsinghua University in Beijing was swindled out of over 17 million yuan ($2.6 million) by fraudsters who pretended to be law enforcement officials.

Phone scams and internet phishing schemes have been on the rise, with nearly 285,000 such cases registered in the first half alone, causing a loss of over 8 billion yuan, data from the Ministry of Public Security showed. Last year, there were 590,000 complaints of telephone and Internet scams that had swindled nearly 22 billion yuan, official data showed. The number of phone scams rose nearly one-third in 2015 compared with the previous year, and internet fraud more than doubled, it said.

The lack of adequate laws to prevent private information leaks and an earlier legal loophole that allowed telecom operators to sell subscriptions without checking any identification documents have created a safe haven for scammers, experts said.

In the case of 19-year-old Xu Yuyu, she received the scam call within days after applying for financial aid at the local education bureau, raising concerns that her private data may have been leaked. Police have detained six suspects allegedly linked to the scam, but are still investigating how they could have managed to get Xu’s information.

Plugging the leaks

A June survey by the Internet Society of China, a non-government industry association, found that 4 out of 5 Internet users in the country had experienced a private-information leak.

A thriving underground market of information dealers collect all sorts of personal data such as ID numbers and addresses from businesses and even government agencies and then sell it to advertisers and even scammers. This has led to the high number of data leaks, said Wan Renguo, a mobile security expert at the Internet security services company Qihoo360.

Authorities have focused on preventing hacking, but they must step up efforts to crack down on this widespread practice of insiders who have access to huge databases selling client data, Wang said.

An information dealer Caixin contacted online said he can provide all kinds of information, including a list of contacts for university professors, and ID information and phone numbers of elderly citizens, who are the most vulnerable scams. About 2,000 data points could be purchased by anyone for about 100 yuan, and the larger the volume, the cheaper it gets, said the dealer, who wished to remain anonymous.