Why Chinese tech companies fear users called the ‘wool-pulling party’

An ecommerce platform in China has just lost around US$1.4 million, thanks to a nimble group of users with an unusual name: The Wool-Pulling Party.

Pinduoduo realized it got “fleeced” last Sunday through a loophole that enabled users to get unlimited online coupons worth approximately US$15 each. The company said it fixed the problem and reported the incident.

But Pinduoduo is not the only online platform that has fallen victim to this group. In fact, these kinds of schemes have become widespread in China, where many tech companies compete for users by handing out cash incentives.

The term “Wool-Pulling Party” refers to users that operate in a legal gray area, taking advantage of promotions to raid platforms for gift coupons and cash incentives. Sometimes they’re as simple as that – users piling on to a too-good-to-be-true deal – other times they use far more nefarious means that may be illegal.

The term is said to originate in a popular sketch performed during the 1999 CCTV Chinese New Year Gala show. But the sketch is actually quite grim.

An old village woman (played by popular Chinese sitcom actress Song Dandan) tells how she stole wool from collectively owned sheep during Mao’s era to make her husband’s sweater, and was consequently subjected to a struggle session, a form of public humiliation and torture not uncommon at the time.

“You were undermining the foundations of socialism!” exclaims the host.

“Yes, I was convicted of fleecing socialist wool.” (drum roll)

Reminiscing the good old days… or not. Here’s a screenshot from the Yesterday, Today, Tomorrow sketch aired during CCTV’s 1999 New Year Gala. / Photo credit: iQiyi

These days, the fleecing is done by the young and tech-savvy. The Wool-Pulling Party usually gathers in online groups to exchange tips on which platform to shave off next. Usually, it’s the new fast-rising companies that catch their attention.

One well-known example involves bike-sharing company Ofo, which burst into the market with a shower of cash incentives to get users to try out their service.

The ruse uncovered in April 2017 included rooting a mobile phone, installing virtual GPS location software, and “unlocking” a bike from the Ofo app – with no cycling needed. Users could earn a couple of hundred dollars a day by targeting bikes with coupons without actually ever leaving their rooms.

The Wool-Pulling Party is also known to target online-to-offline (O2O) businesses that give out online coupons, as well as online financial platforms known as peer-to-peer (P2P) lenders.