The era of online scams

December 19, 2018 12:27
While the overall crime rate in Hong Kong is declining, the number of fraud cases is on the rise. Photo: Reuters

It’s widely believed that only those with little education would fall for phone scams. Apparently, this is not the case. 

Leo Ho Cheuk-yin, winner of the World Solo Harmonica Championship at the age of 15 in 2009, was born into a well-educated family. His father is the head of the Department of Orthopaedics and Traumatology at Prince of Wales Hospital. 

Despite holding a college degree and being an accomplished musician, Ho lost HK$5.9 million in a recently reported phone scam.

“I was too preoccupied with music and have no idea how dangerous the world is,” he wrote in his Facebook account.

Hong Kong police have launched a massive campaign to crack down on online scams. They arrested up to 64 suspects in 317 online scams from Dec. 3 to 17.

The cases involved several gangs, who used a large number of computers, smartphones and social media accounts and sold anything online from concert tickets to electronic products and designer handbags.

Buyers are typically lured by a 20 to 30 percent discount to the market price, but they end up not getting the goods even after making the payments.

These gangs would also tempt people to sell their bank accounts, which they would then use to receive payments or launder money.

Hong Kong’s overall crime figures dropped by 3 percent in the first 10 months of this year, according to data from the Security Bureau. 

The number of burglary and theft cases declined by 18.2 percent and 17.4 percent respectively during the period. However, the number of fraud cases surged by 19.9 percent to 7,047 cases. 

In today’s world, criminals have to figure out new ways to pursue their trade. For example, people are taking less cash with them when they go out because digital payment is now accepted in most stores.

Also, there are so many surveillance cameras around, making it more difficult for criminals to get away with their illegal activities.

Fraud, on the other hand, is considered a low-cost but highly rewarding type of crime.

Telephone scams do not require sophisticated techniques on the part of the criminals, just gullible individuals as victims. But new types of scams are getting more sophisticated.

Wong Ching-kit, 24, was arrested in Sham Shui Po on Sunday after he was believed to have orchestrated a stunt of throwing cash at pedestrians in the area, causing public disorder on the streets.

Wong is the owner of Epoch Cryptocurrency, which is just a Facebook page that promotes cryptocurrencies. He is widely known online as “Coin Young Master”.

This is the way his “business” works.

He first created a cryptocurrency called FCC (FileCash Coin), which is listed on a small exchange. As the majority owner of the cryptocurrency, he was able to push up its price.

At the same time, Wong lured investors with his fancy racing cars and outrageous moves like throwing money from a building to demonstrate how lucrative trading FCC could be.

He also sold expensive cryptocurrency mining machines to those who wanted to follow his path to "wealth".

If everything worked well, Wong would have been able to dump his FCC holdings at high prices to newcomers in the game,  making even more money.

This article appeared in the Hong Kong Economic Journal on Dec 18

Translation by Julie Zhu

[Chinese version 中文版]

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Hong Kong Economic Journal columnist