Saturday, May 18, 2024

A Chinese criminal ring has stolen $50 million by franchising thousands of fake online shops, experts say

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SR Labs is a German-based cyber security company that consults with clients in more than 21 countries. The company last week announced the findings of a three-year study, which found that one Chinese criminal organization was linked to more than 75,000 fraudulent online shops.

The group, dubbed “BogusBazaar,” mostly runs websites claiming to sell items like designer clothes at cheap prices, the report says. Instead, the sites harvest credit card details and collect payments for the fake merchandise.

The fake shops processed over $50 million in orders between March 2021 and April 2024, SR Labs says.

A spokesperson for SR Labs noted that, since every successful order does not conclude with successful payment, the immediate monetary damage to the victims is likely lower than the figures suggest. But the exposure of credit card details to the scammers will likely “add to the overall damage.”

SR Labs said the group is highly organized, using a cloud computing model where a core team manages the system’s infrastructure while a “decentralized network of franchisees operates fraudulent shops.”

“A typical BogusBazaar server runs about 200 webshops, with a few servers hosting more than 500,” the report says. “These servers are often associated with more than a hundred IP addresses each.”

Additional data shared with Business Insider showed that victims in France placed the most orders on the phony shops — almost 200,000. Users inside the United States placed the second-most orders — about 168,000 — at a value of more than $12.5 million.

Most of the scam’s 850,000 victims come from inside the United States and Western Europe, with almost no victims identified inside China, where the fraudsters are based, SR Labs says.

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