Online shopping depends on a shared agreement that most people will behave. Click buy. Only click refund if it’s a legit return. A teenager in Shanghai noticed that this agreement was more of a suggestion.
According to court records and reporting from the South China Morning Post, a 17-year-old, surnamed Lu, discovered a flaw in a cosmetics shopping platform’s refund process. Customers were asked to enter courier tracking numbers when requesting returns. The platform didn’t verify whether those numbers actually belonged to returned packages. If a number existed at all, the refund cleared.
Lu didn’t try this once or twice. He turned the loophole into a full operation.
How This Teen Pulled off a $570,000 Refund Scam, and Got Jailed for It
Over several months, he placed orders using multiple buyer accounts and filed refund requests using fake courier numbers. The platform processed them automatically, returning the money without recovering the goods. Prosecutors said Lu submitted 11,900 fraudulent refund applications, receiving goods worth 4.76 million yuan, about $680,000.
The resale part came next. Lu moved the products onto secondhand platforms and sold them off, making roughly 4.01 million yuan, or $570,000, in profit. That figure reflects earnings after refunds, not before. He kept both sides of the transaction. The platform lost inventory. Lu built a pipeline.
Chinese media reported that the money moved quickly. He spent the money on new phones, nice clothes, and even treated his friends to a handout. He truly thought he had found a loophole that never seemed to end. Until it did.
Eventually, the platform noticed something was off. In March 2024, it reported abnormal refund activity to the police after seeing a volume of returns that never physically returned anything. Investigators followed the accounts back to Lu and arrested him.
In July 2025, a Shanghai court sentenced Lu to six years in prison. Under Chinese law, fraud involving especially large sums can carry sentences of ten years or more. The court reduced his sentence because he was a minor when the crimes occurred.
The case emerged as China’s e-commerce industry began confronting the downsides of lax refund processes. Sellers have raised alarms for years about exploitation, and sustained reporting on fraud contributed to several major platforms limiting automatic refunds last year.
Online reactions split predictably. Some focused on Lu’s ingenuity. Others blamed the platform for leaving a door open and acting surprised when someone walked through it repeatedly.
Lu followed the incentives as far as they would take him. The loophole worked reliably. The consequences were final.
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