Mobile App Fraud Prosecutions In China
I. Legal Framework for Mobile App Fraud in China
Mobile app fraud generally falls under fraud (诈骗罪, Article 266 of the PRC Criminal Law). Several provisions and related regulations are relevant:
1. Fraud (Article 266, PRC Criminal Law)
Definition: Deceiving others to obtain property illegally.
Elements:
Use of deception (lying, tricking, or using fake apps or interfaces).
Obtaining property (money, virtual currency, services).
Intentional and illegal.
Penalty:
Standard: up to 3 years imprisonment or fine.
“Serious circumstances” (e.g., large sums, multiple victims): 3–10 years and fine.
“Especially serious circumstances” (e.g., massive online fraud networks): 10+ years, life imprisonment possible.
2. Illegal fundraising or pyramid schemes
Many apps disguise fraudulent investment or loan schemes.
Criminal provisions include:
Article 176: Raising funds illegally.
Article 224: Illegal fundraising or financial fraud.
3. Telecommunications Fraud (Article 287)
If the app uses telecom or online systems to defraud, sometimes prosecutors charge under telecom fraud.
4. Cybersecurity and Consumer Protection Law
Platforms may be held jointly liable for facilitating fraud or failing to remove reported scams.
II. Case-Based Analysis of Mobile App Fraud
Below are seven representative cases, based on publicly reported judgments from different provinces, showing judicial reasoning and outcomes.
Case 1 — “Fake Investment App Case” (2019, Zhejiang Province)
Facts
Defendants created a mobile app claiming to provide high-return stock investments.
Users deposited 500–50,000 RMB.
App displayed fake returns to lure more deposits, but funds were actually transferred to defendants’ accounts.
Court Reasoning
The app constituted a tool of deception.
Victims were misled by falsified information.
Amount defrauded: ~5 million RMB.
Each defendant had clear intent to defraud.
Outcome
Main defendant: 7 years imprisonment + fine
Accomplices: 3–5 years imprisonment
Restitution ordered to victims.
Case 2 — “Virtual Currency Scam via Mobile App” (2020, Guangdong)
Facts
App promised users virtual coins exchangeable for real money.
Users deposited funds, but app displayed fake balances and blocked withdrawals.
Over 3,000 victims were involved.
Court Reasoning
Large-scale online fraud; multiple victims.
Money obtained through deception → Article 266 applies.
Virtual currency treated as property under Chinese law.
Outcome
Lead defendant: 9 years imprisonment + heavy fine
Co-conspirators: 4–6 years
Confiscation of servers and mobile app code.
Case 3 — “Loan App Fraud Case” (2018, Beijing)
Facts
Loan app claimed to provide instant small loans.
Users were charged upfront “service fees” but loans never disbursed.
App auto-deleted after payments, making retrieval impossible.
Court Reasoning
Fraudulent intention was clear.
“Property obtained” included fees paid by users.
App used tech to disguise identity → aggravating factor.
Outcome
Defendant: 5 years imprisonment + restitution
Tech team minor: 2 years probation.
Case 4 — “Pyramid Scheme via Health App” (2021, Shanghai)
Facts
Health app sold supplements, promising commission for recruiting others.
Recruitment-based rewards formed a pyramid structure; actual users lost money.
Promoters claimed profits from app usage, but it was purely fraudulent.
Court Reasoning
Fraud and illegal pyramid scheme overlap.
Criminal law recognizes “financial fraud through app-based pyramid schemes.”
Large number of victims, rapid online dissemination aggravated liability.
Outcome
Main promoter: 8 years imprisonment
Mid-level recruiters: 3–5 years imprisonment
Fines and restitution ordered.
Case 5 — “Fake Shopping App Scam” (2017, Sichuan)
Facts
App mimicked legitimate e-commerce platforms.
Victims paid for goods; goods were never delivered.
App used professional-looking interface and fake customer support.
Court Reasoning
Deceptive interface counted as “trickery” under Article 266.
Obtaining money through online tools is legally equivalent to traditional fraud.
Outcome
Defendants: 3–6 years imprisonment
Full restitution required; app permanently shut down.
Case 6 — “Ponzi-Type Investment App” (2022, Hunan)
Facts
App promised daily interest on deposits, claiming “algorithmic AI investment.”
Early investors were paid from new deposits; eventually collapsed.
Fraud amounted to ~12 million RMB; 1,200 victims.
Court Reasoning
Classic online Ponzi scheme using app interface.
Court noted “systematic fraud” with multiple developers → higher sentence.
Outcome
Lead developers: 12–15 years imprisonment
Assets confiscated; victims partially compensated.
Case 7 — “Cryptocurrency Exchange App Fraud” (2021, Shandong)
Facts
App claimed to allow cryptocurrency trading.
Fake trading interface showed profits; withdrawals were blocked.
Victims transferred RMB to app’s wallet.
Court Reasoning
Cryptocurrency treated as property.
Misrepresentation of app functionality constituted deception.
Large-scale fraud → Article 266, serious circumstances.
Outcome
Lead defendant: 10 years imprisonment
Technical accomplices: 4–7 years
Servers, domain names, and funds confiscated.
III. Observations on Judicial Patterns
Large-scale fraud or multiple victims → harsher sentences
5–15 years imprisonment common for sums >1–2 million RMB.
Use of technology (app or server manipulation) → aggravating factor
Courts note automation, deletion, or fake interfaces increases severity.
Restitution is emphasized
Defendants often required to repay victims, even if imprisonment imposed.
Overlap with other crimes
Pyramid schemes, illegal fundraising, or telecom fraud can be combined with Article 266 charges.
Platform liability
Companies hosting fraudulent apps may face fines, criminal investigation, or mandatory reporting obligations.
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