Police blame file sharing for gang's online fraud

The practice of saving account details and passwords in a computer equipped with file-sharing software has been blamed for an online fraud that netted its perpetrators HK$255,000 in the past six months.

In a series of raids across the city on Thursday, police arrested 14 people on suspicion of money laundering, theft or accessing a computer with criminal or dishonest intent.

The 13 men and one woman, aged 19 to 50, included core figures of the fraud syndicate, Superintendent Chiu Sau-mee of the commercial crime bureau said.

Investigations indicated some victims saved passwords for their payment by phone (PPS) and bank accounts, mobile phone and e-mail on their computers, which also had file-sharing software installed. Police believe this helped the syndicate obtain passwords and steal money from five PPS system account holders. One victim lost HK$100,000.

Fraudsters activated the SMS forwarding function of the victims' mobile phones and diverted messages to their own phones so they could get a one-time password issued by PPS during a transaction. They then registered a Jockey Club account as a new merchant with PPS and transferred money from the victims' bank accounts into it.

The scam prompted the banking industry and mobile phone operators to devise additional controls for the payment system.

From Monday new merchant registrations - including the Jockey Club, credit services, securities brokers and foreign exchange companies - will have to be verified by telephone within three days before they can become effective.

The Monetary Authority said new controls on SMS forwarding would take effect by the end of October.