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November 1, 2012

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11 on trial for elaborate scam with POS devices

ELEVEN people including four delivery men went on trial for operating an illegal business in which they earned more than 57 million yuan (US$9.14 million) with point-of-sale machines, Xuhui District People's Court heard yesterday.

Prosecutors said the defendants targeted companies and individuals in Huijia Building on Caoxi Road N., where the four delivery men were responsible for delivering goods for

Li Guoyan, alleged leader of one gang and who pleaded guilty, told the court the delivery men would persuade buyers who had ordered goods on the website to pay in cash, rather than by credit card, by offering them a 1 percent discount.

The gang members then found a client who wanted a cash advance on his or her credit card. They would complete the purchase with the client's credit card for a 2 percent commission and give the client the buyer's cash, minus the commission. Thus the gang members would earn 1 percent on each transaction while the client would benefit by not having to pay the high interest rate for a cash advance, the court heard.

Between May 2011 and March 2012, Li earned more than 30 million yuan from the scam while the total sum was even bigger for the whole gang, prosecutors said.

The other gang, led by suspect Zhang Guohua, practiced the same scam as Li's gang, the court heard. Prosecutors said Zhang joined Li's gang in May 2011.

A verdict was not announced.


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