Arrests made in China over Alibaba fraud case

36 people were arrested for allegedly scamming overseas buyers on the site

Chinese police have arrested 36 suspects for allegedly operating scams that netted US$6.6 million from customers from customers of e-commerce platform and other sites.

The arrests were made in the Chinese city of Putian in April, but were only disclosed on Wednesday at a news conference held by Alibaba and Hangzhou's public security bureau.

The arrested suspects operated by pretending to be legitimate suppliers on, a business-to-business platform that helps connect Asian manufacturers with global buyers.

The alleged scammers would receive payments for orders, without shipping the goods, according to Alibaba spokeswoman Jasper Chan. At other times, the suspects would ship goods of lower quality than was advertised.

In addition to, the suspects used others sites to scam customers, said Chan. The Chinese police have yet to name those sites, she said.

The 36 suspects are believed to be involved in fraud cases that had threatened to damage the reputation of In February, the company revealed that 2,326 suppliers on the site had engaged in scams against overseas buyers from 2009 to 2010. The fraud was so extensive that 100 sales people, along with several supervisors and sales managers were found responsible for allowing the crimes to evade detection., and its parent company Alibaba Group, have sought to reassure customers of the site's safety.'s CEO and COO both resigned in response to the fraud cases, while employees involved with the fraud were terminated. Alibaba has also paid $1.94 million to compensate buyers who were victims on the fraud.

The 36 suspects, however, were only responsible for part of the fraudulent transactions committed on, Chan said. The company has been assisting Chinese police to track down other suspects involved with e-commerce scams.

Following the disclosure of the fraud cases, has taken new measures to prevent scams from taking place. Since February, the number of fraud complaints received monthly by has declined 70 percent, according to the company.

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Michael Kan

IDG News Service
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