Lanzhou police lead effort to bust major online lending scam

Police in Lanzhou, capital city of Northwest China's Gansu province, cracked down on a large financial scam group, one of the largest cases in its kind in China.

With 200 million yuan ($29.1 million) in seed money, the group issued over 3.27 million illegal loans to about 475,000 people from all over the country, gaining 3.14 billion yuan in illegal profits.

The gang developed a mobile phone application called "Tiantu", or "Sweet Rabbit" in English, to carry out its operation. The app looked like a food recipe application but after downloading it to the phone, it would turn into a loan lending application. Then it illegally obtained access to all of a user's personal information, such as address lists and call records, and used "consumption advance payment" as bait to induce the users to borrow money. Then it charged high interest at 30 percent to 50 percent as the "service charge".

Since May 2018, the criminal group illegally obtained the personal information of more than 11.976 million people. When the group was caught by police, it still had arrears of 1.47 billion yuan that had not been returned, and overdue interest of 8.37 billion yuan, according to local police.

One victim, using the alias Wang Xiaohong, just started to work and wanted to buy a new phone. She borrowed 3,000 yuan from the Sweet Rabbit app and only got about 2,000 yuan, as the rest was deducted by the platform as the "service fee".

As a result of a job change, she did not have money to pay back the loan and the interest grew exponentially. After several months, her final debt was as high as 150,000 yuan. To force her to pay the money, the group began to forge naked photographs of Wang Xiaohong and created memorial-style pictures, as if she were dead. Then they sent them to her, her colleagues, relatives and friends through social platforms, such as WeChat. Under such pressure, Wang had no choice but to ask for help from her family, borrowing money to pay back the money. 

In November, Li Gang, a police officer with the Public Security Bureau of Lanzhou, discovered the scam during a routine online check. He found that there were a large number of comments about the Sweet Rabbit app, labeling it as "swindler software" or "loan software". Li said that the software could be found in all the application stores on both iOS and Android platforms and the number of the downloads was huge.

In January, Lanzhou police started to investigate. Police collected 160GB of data from a cloud server. They found that from May 2018 to March this year, the main suspect, surnamed Wang, started the criminal group, developed 1,317 apps, such as Sweet Rabbit, set up 24 online loan platforms and signed loan contracts with the victims through more than 40 shell companies.

Organized and under the command of the Ministry of Public Security, the active coordination of the Provincial Public Security Bureau and the strong support of local public security departments, a special case group organized more than 400 police officers to operate synchronously in East China's Zhejiang and Anhui provinces, and Northwest China's Shaanxi province and other places. They captured 218 criminal suspects and froze assets worth nearly 2.1 billion yuan.

"This case is the latest upgraded version of the financial scam, which brings together the forms of illegal theft of citizen information in cybercrime, fictional facts and scripts in telecommunications fraud, especially violent collection of crimes committed by criminal and evil forces, extortion, provoking trouble and other forms of crime. It could be said it is extremely deceptive to combine a variety of criminal manifestations and means", said Xiao Chun, deputy director of the Gansu Provincial Public Security Bureau, deputy mayor of Lanzhou City and director of the Municipal Public Security Bureau.