Why more of China’s Gen Z are falling victim to online fraud

It’s one of the oldest scams in the book – a caller says your son or daughter is in trouble and asks for money to be transferred to an unfamiliar bank account. The surprise is that many people, usually the elderly, still fall for this age-old trick.

But a bigger surprise may be that the racket is getting a Gen Z makeover, and young people are also falling for it. The accomplices: easy, one-touch mobile payment transfers and the fact that most of Gen Z, the digital natives who prefer online chats to voice calls, won’t think of calling the other party to check.

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For Xue Youbo, an 18-year-old college student, it was all over in a few seconds. The fraudster hacked into the QQ account of one of Xue’s friends, enabling him to impersonate the friend and send an urgent request for money with the excuse that his father was in a car accident.

Xue lost 5,000 yuan (US$700) after instinctively scanning the WeChat payment QR code that his “friend” sent him. “Very outmoded scam, right?” Xue said in frustration. “The whole process – scanning the QR code and facial recognition payment […] – only took me one minute. I don’t blame anyone, but the online payment service is too convenient […] not leaving me any time to think about it.”

Xue’s experience is becoming more common among Chinese teenagers born in the digital era. They have led a generational shift in communication patterns and payment habits – from offline to almost entirely internet-based. But the online convenience they enjoy puts them at higher risk of being defrauded.

Young people are increasingly falling victim to scams involving fraudulent money transfers, according to China’s internet watchdog.

Those born after 2000, who have amassed sizeable savings by the time they enter college, are particularly ripe for picking. The post-2000 generation accounted for 15.8% of China’s online fraud victims in 2018, surging from just 0.7% in 2014, according to a report from the Liewang Platform, a website where Chinese internet users report online fraud cases.

In all, an estimated 390 million yuan (US$55 million) was lost to internet fraud last year, reaching a five-year high, the report said.

The young are being duped at a much faster pace than other age groups because of their more frequent use of online payment platforms like WeChat Pay and Alipay, which have increasingly been targeted by fraudsters. Alibaba’s Alipay and Tencent’s QQ and WeChat, China’s largest social media platforms, did not immediately reply to a request for comment. Alibaba Group is the parent company of the South China Morning Post.

WeChat Pay and Alipay, which together accounted for more than 90% of China’s mobile payments last year, have been fighting fraud.

Alipay offers a technology to determine whether a QR code is generated by its own system or if the embedded code being scanned is a malicious link. WeChat, which asks users to report illegal accounts, said it closed dozens of accounts for credit card fraud last year.

“It’s too convenient. [The transfer process] does not require a check of the borrower’s personal information,” said Xue. “I felt it might have been a scam but by the time I looked at my phone, the money was transferred.”