Why more of China’s digital-savvy Gen Z youth are falling victim to online fraud than their elders

An estimated 390 million yuan was lost to internet fraud in China last year, a five-year high

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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 Gen Z, the digital natives who prefer online chats to voice calls, won’t think of calling the other party to check.

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 (USD 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 (USD 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. QQ and WeChat, China’s largest social media platforms owned by tech giant Tencent Holdings and Alipay, owned by Alibaba Group, the parent company of South China Morning Post, did not immediately reply to a request for comment.

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.”

QR codes have found widespread popularity in China thanks to mobile payments but scanning them has even become a chore for tech-savvy Chinese who are moving away from app-based payment methods to something even more portable and convenient: their face.

Alipay rolled out its Dragonfly facial recognition system – an upgrade of its Smile-to-Pay system – in December last year, and has since expanded it to over 300 cities in China. WeChat declined to provide statistics on its facial recognition payments coverage.

While instant messaging tools, e-commerce shopping, and food delivery services have made people’s lives more convenient, the nature of online services puts them at higher risk of fraud, legal expert Cui Xiaojun was quoted saying by Guangzhou state-media people.cn.

He warned that users should call friends to confirm the authenticity of any request for money made via social media platforms like WeChat, QQ or by email.

Although Gen Z are the fastest growing target for online fraudsters, their average losses of 2,000 yuan USD 283) per scam are still the lowest of any age group, the report said.

Digital-savvy youth may be the most competent users of technology but they are prone to scammers playing on their emotions, whether that be sympathy or greed.

Xue said the trusting nature of young people is what causes teenagers like him to fall victim to the “friend in need” scam, but admitted that his age group is also taken in by greed. For example, fraudsters entice young people to click on malicious links by offering cash rewards or discounts.

“These young people become the target of scams because they have weak internet safety awareness and low vigilance,” said the Liewang Platform report. The use of malicious links accounted for half of all scams involving post-2000 victims.

Some scams have become so well-known that the perpetrators have had to make them more sophisticated, such as creating fake jobs with attractive salaries or impersonating investment advisers to persuade “investors” to buy high-return stocks, according to two examples cited in the report. In another ploy, fraudsters disguise themselves as potential partners on dating sites, then ask for money.

“I’ve always heard about people losing money to online fraud but never expected it happened to me,” Xue said. “I learned that lesson at the very beginning of my college life.”

This article first appeared on the South China Morning Post.