E-commerce schemes involving empty boxes, QR codes and fake tracking numbers are linked to gambling and money laundering in China

E-commerce is giving money laundering a modern makeover. Empty packages from China showing up on doorsteps are often linked to unscrupulous online sellers trying to boost sales numbers in what’s called a brushing scheme. But investigators in China say these mysterious packages are also being used for more nefarious purposes.

Police in the city of Wuxi, northwest of Shanghai, recently busted an operation that used a so-called empty package scheme to launder illegal cross-border gambling money, state-run news agency Xinhua reported on Thursday.

In this case, the physical packages were never even sent. The suspects used empty package delivery services to create false online shopping and delivery records to disguise illegal transactions.

“From gamblers’ deposits to fabricated transactions, the whole system is very complex and it runs on online platforms,” Guan Lichao, an internet security supervisor with the Wuxi Public Security Bureau, told Xinhua.

While gambling is illegal in China, this doesn’t stop platforms from catering to people in the country while running their operations elsewhere. But operators have to use some creative tricks to move their money around.

Police say the scheme they discovered involves gambling platforms using third-party payment providers to transfer their gains and make it look like someone just bought a new knick-knack online.

The scheme works with the help of QR code providers who generate codes to transfer funds. They also have fake shops set up across different e-commerce platforms. After someone scans the code, a fake shopping record is created. But making a fake online sale look authentic requires a fake shipment. That‘s where the empty package platforms come in, which forge deliveries using fake tracking numbers.

Police might not have discovered the complicated ruse if not for a person who was left waiting for an iPhone that never arrived. Police say a man surnamed Lin made a complaint after buying an iPhone over WeChat and wound up with nothing to show for it.

This kicked off an investigation that uncovered 2,700 websites involved in empty package schemes and three criminal organizations. So far, police have arrested 40 people, some of whom were employees of legitimate delivery services. The names of the companies involved were not made public.

Police also froze real estate assets and more than 20 million yuan (US$2.9 million) in funds related to the case. But that might just be the tip of the iceberg when it comes to the amounts actually laundered.

Wu Fangquan, deputy of the internet security department for the Wuxi police, told reporters that the gangs involved have been operating since as early as 2016 and completed 600 million empty package transactions. At least 10 billion yuan of illegal funds may have been transferred, Wu said.