In what is thought to be the first case of its kind on the mainland, police in Hangzhou, China, have arrested seven people for allegedly blackmailing online merchants by threatening to post negative buyer ratings on their Taobao Marketplace storefronts.
At a joint press conference today in Hangzhou, officials from the city’s Public Safety Bureau and Taobao Marketplace said the suspects are part of a growing class of criminal in China called “malicious feedback agents” who act as digital character assassins operating on China’s shopping websites.
Some agents extort money from online store owners through threats. Others hire themselves out to competing sellers to pose as ordinary shoppers, making purchases from rival online shops and then rating their buying experiences as negative or neutral. Tens of thousands of agents even sell their services openly on the Internet.
Threatening tospoil the ratings of online merchants can be an effective extortion racket because of the unusual importance Chinese shoppers attach to consumer feedback. In an April report by market research consultancy McKinsey, researchers wrote that social media has a greater influence on purchasing decisions in China than it does anywhere else in the world.
“Chinese consumers prize peer-to-peer recommendations because they lack trust in formal institutions,” the report stated. “In general, the Chinese populace is skeptical of information from news sources and advertising.”
Wang Yihua, senior director of theTaobao.com information security department, said the website is working with police to crack down on agents. “Taobao Marketplace also has a number of protective mechanisms in place including a direct reporting channel for these types of behaviors as well as relevant policies and user regulations in order to safeguard the interests of buyers and sellers alike,” Wang said in a statement.
Taobao officials said the website in the first10 months of the year has levied penalties against some 65,000 account holders suspected of engaging in malicious feedback activities. The site also identified and cancelled more than 100,000 orders placed by agents in order to post negative reviews.
In a similar case, Taobao last year discovered one of its own employees was paid more than RMB 1.24 million ($200,000) by shop owners to remove nearly 1,000 legitimate negative ratings from their online storefronts. The employee was later fired, arrested and sentenced to an undisclosed jail term.
Those convicted of extortion and blackmail in China can receive fines and prison sentences of up to three years.
At the press conference, police and Taobao officials said the arrests were the first of their kind. The Hangzhou Public Security Bureau intends to continue investigations and expects to arrest additional suspects for malicious posting by the end of the year.