Facing the Real Risk of Theft from Your Bank Account in China

An increasing number of friends are reporting troubling cases of theft from their China bank accounts. One friend, after years of working in China and saving every penny, was preparing to return to the US, but suddenly every penny in her ICBC bank account was stolen. The ICBC bank officials told her that someone had a copy of her card and had taken the money out. She asked how this was possible without knowing her password. No explanation was given, except that it was somehow her fault. She spent five days arguing with them and got nowhere. They said that the thief could have been working with her to perpetuate fraud on the bank, so why should they refund her money? Her only option now is to sue, but she has to go back to the US soon and fears she won’t have the ability to pursue the case. But we’ve encouraged her to work with a lawyer to fight this. She will, and I hope to have good news to report sometime.

Her story has almost exactly the same set of facts that we find in a chilling account, “How I sued the world’s largest bank and won” at Shanghaist.com. In this case, it was a smaller amount, 15,000 RMB that was taken from the author’s ICBC account. He encountered the same helpful consumer service policies and attitudes, and was forced also to sue for something that was clearly not his fault. He won, and it only took 7 months and some modest attorney fees to get his money back.

If you have a bank account with an ATM card, there is a real risk that one day money will begin disappearing from your account. There are some very high risk factors in China you need to understand:

1) The daily limit for ATM withdrawals is much higher than it is in the U.S. and Europe. A thief typically can take out 20,000 RMB a day (over $3,000), which is 5 to 10 times higher than typical US limits.

2) The daily limit may not be over a 24-hour period, but may be based on the calendar date, so if that applies to your bank, then a thief can take 20,000 RMB out at 11:55 pm, and another 20,000 RMB out at 12:05 PM.

3) Banks in China often don’t have effective anti-fraud protection.

4) There are many thieves with card copying or card scanning devices who can make a duplicate of your card. If they or a small video camera can watch you enter your password, having your account number and your password leaves you defenseless.

5) Thieves can sometimes pull money out of your account without using your password. I don’t know how this happens, but it has happened to multiple people in China, and it happened to us with our US bank.

6) When someone pulls money out of your account without knowing your password, it should be the bank’s fault and they should reimburse you. But consumer service attitudes and policies may not be identical to those in your home country. China banks may tend to blame the customer and argue that maybe the thief was collaborating with you, so they might not cooperate unless you take them to court. You can sue and win in China, but it will take a lot of work and the help of an attorney.

Because money in the bank is so vulnerable, I suggest several best practices:

1) Do not keep large amounts in any single Chinese bank. Move a lot of it into US accounts without ATM cards or with two-part authentication, and keep plenty of cash.

2) Use your bank cards as little as possible. Instead, use cash to make payments when possible.

3) Do not let employees walk away with your bank card (they might run it through a card copier device of some kind). Keep your eyes on it.

4) Do not let your card be scanned in any place that seems questionable or seedy.

5) When using ATM machines, look for unusual devices, small video cameras, etc., that might have been added.

6) Keep good records of where you have been so that if the bank says it must have been you that pulled all your money out of your account in, say, Harbin, you can prove you weren’t in Harbin that day.

7) Monitor your bank account frequently, and make sure you receive automatic text messages when money is taken out of your ATM.

8) When you do find a problem, document in detail who you spoke with, what you said, what they said, etc. You will needs lots of documented details if you have to sue the bank to get back missing money.

9) Avoid trusting your money to any bank that has a bad track record of protecting the money of its customers. If you know of banks that have performed well in this regard, please let me know.

These problems are not unique to China, but they seem to be a lot more frequent here and more severe, especially with the high daily minimum that thieves can take out.

If you do online banking, your risks are also high due to hackers. I suggest you use complex passwords that you change often, and only use secure computers to access your bank accounts. It’s good to have a cheap computer that is never used for browsing but only for bank access, and even then keep good firewall and anti-spyware software on it, keep it updated, use more secure browsers like Chrome or Firefox, and don’t use untrusted wifi networks to access your accounts. For added security, use VPN when you access your bank account.

Don’t keep all your money in any one account, and keep a wad of cash somewhere, too. Thieves can get everything, but we shouldn’t make it easy for them.

By |June 17th, 2015|Categories: Business, China, Finances, Internet, Investing, Scams, Shanghai, Shopping, Surviving, Travel tips|Tags: , |Comments Off on Facing the Real Risk of Theft from Your Bank Account in China

Beware Fake Rental Fapiaos (Receipts) in China

Many expatriates living in China receive housing stipends that cover at least part of the monthly cost of rental here. In expensive cities like Shanghai, getting your housing stipend can be essential. Your reimbursement, though, requires that you provide a “fapiao” (official receipt from the government) which shows that taxes have been paid. The tax rate right now is 5%, so your fapiao of, say, 8,000 RMB costs your landlord 400 RMB. Your employer then uses the fapiao for some kind of tax benefits in reimbursing you. If you don’t provide a proper fapiao, you generally won’t get your housing stipend.

A few things can go wrong on this process. Make sure you know exactly what name your company requires to be on the fapiao. For me, it has to be the proper legal name of my company, not my name and not other commonly used versions of my employer’s name. One time my landlord bought several months’ worth of fapiaos all at once, but used the corporate name I pointed to on my business card instead of the official legal name, and I ended up having to pay for new fapiaos out of my pocket. In that process, though, I learned that getting fapiaos involves going to a local tax office, showing your rental agreement and your passport, and then simply paying 5% of your rent to buy the fapiao.

Also make sure you get fapiaos by the month. Your company will generally want one for each month, not one for three months at a time, even if you pay your rent once every three months as I do.

A more troubling problem you may encounter is fake fapiaos. Fake receipts? Yep, it happens, and is an easy way for an unscrupulous person to make some quick money. This may happen when a real estate agent, after closing the deal for your apartment, offers to save the landlord the trouble of getting fapiaos. The agent may have a friend allegedly at the tax bureau who can help you get the fapiaos easily. If the agent doesn’t need a copy of your rental agreement, that’s a clear sign that something is wrong. I don’t know if the seemingly official fapiaos are printed on stolen receipt paper from government offices or are just really good forgeries, but they look like the real thing and businesses may accept them and reimburse you, but if there is an audit or careful investigation, they may discover that the fapiaos are fake and you may then be denied your reimbursement.

For Shanghai folks, you can check to see if your fapiao is real or not using a government website: http://www.csj.sh.gov.cn/wsbs/WSBSptFpCx_loginsNewl.jsp. It’s in Chinese, so you may need help doing this.

If you are getting fake fapiaos, let your landlord know. It can hurt their credit and their reputation with the government. It may end up hurting you. The crooks who are stealing your money (and stealing tax money from China) with fake fapiaos need to be stopped. Of course, your agent or whoever gave you the fake fapiaos will be shocked that their friend in the tax office made some kind of error. Maybe they knew, maybe they didn’t, and maybe it was all an innocent mistake, but given the easy money to be made, chances are someone is just pocketing the money, and not pocketing it accidentally.

Unfortunately, one acquaintance of ours says that she got fake fapiaos by going to the fapiao office her business told her to use. I think this was an official fapiao office but I need to confirm that. Whether it was an accident or intentional theft, you need to recognize that there is a possibility that the fapiao you get is fake. Check to make sure they are legit, and try not to get too many months of fapiaos all at once in case there is a problem with them.

By |May 18th, 2015|Categories: China, Finances, Housing, Products, Scams, Shopping, Surviving|Tags: , , |Comments Off on Beware Fake Rental Fapiaos (Receipts) in China

Beware Counterfeit Money from ATMs: It Can (Rarely!) Happen in China

Two good friends of mine were traveling in Beijing recently and took out several thousand RMB from a Bank of China ATM machine in the lobby of a popular international hotel chain with a great reputation. Later that day, when they used their cash to pay a cabbie, he checked the bill they gave him and declared it was fake. They tried several other bills and all were fake. They didn’t believe the cabbie. They later went to a restaurant and had their bills rejected. They went back to the hotel and confirmed that the bills were fake, but the hotel said it wasn’t their fault and the bank claimed that it wasn’t possible for fake bills to be issued from their machine.

I’ve read of others encountering fake bills from ATMs, usually with the insistence of the bank that it is not possible. I’m afraid it can happen, though it has never happened to me. But now when I get cash out, before I leave the ATM, I hold a few up to the light to see if they are watermarked. The fake bills my friends had were lightly printed in the watermark area so it looked like a watermark, but holding it up to the light produces a much different effect.

Check a few bills at your ATM machine to reduce the risk of getting a big wad of fakes. Just my two cents.

By |May 17th, 2015|Categories: China, Scams, Surviving, Travel tips|Tags: , , , , , , , , |Comments Off on Beware Counterfeit Money from ATMs: It Can (Rarely!) Happen in China

Beware Inflated Delivery Charges in China: Get Pricing First

Delivery fees in China are usually surprisingly low. Kuaidi, rapid delivery, is far less than it is in the United States and is a pervasive way of moving goods, with the postal system being used far less for such things. But aways be ont he alert regarding fees. I’ve seen a number of cases where high delivery fees are being used to compensate for low asking price. When delivery is involved, make sure you have the delivery fee pricing before you buy. On TaoBao or related online services, check the delivery fee carefully–sometimes it can be quite large. Of course, this is a problem anywhere. In the States I’ve seen offers for “free” products that included $20 shipping and handling fees.

In China or anywhere else, never agree to any service before you know what the price is. The danger is that you’ll assume that the customary low price for something must apply, only to face a painful surprise, as happens in the karaoke scam and other scams.

By |November 12th, 2014|Categories: Scams, Shanghai, Shopping|Comments Off on Beware Inflated Delivery Charges in China: Get Pricing First

You Are One Guessed or Stolen PIN Away from Disaster: Be Careful With Your ATM Card in China (or Anywhere)

A friend of mine in Shanghai just had 9000 RMB (US$1500) stolen from his Korean bank account by somebody using his ATM card number in Poland. His bank is unsympathetic. They claim that he must have given his card or PIN number to somebody and that is how they  took the money out. But he never gave it to anyone, though someone may have rigged an ATM machine to read his info.

Your ATM card is a disaster waiting to happen. If someone gets your number and your PIN, by theft or guesswork, you may have no recourse. You must limit the use of your card to avoid having thieves scan it and not keep too much money in any account that can be stolen using an ATM card.

Whenever you use your card with a retailer, there is a chance that the retailer is keeping your PIN, perhaps inadvertently, and this PIN can then be hacked and sold to thieves. See the 2006 story from NBC News which explains some of the basic threats.

The more you use your card, the greater your risk. The more money in your account, the greater your risk. Keep some of your money in accounts that cannot be accessed with an ATM card using the terribly inadequate 4-digit PIN security system.

Surprisingly, money may be swiped from your account using your ATM card number even if the thieves don’t know your PIN number. Sound impossible? Our experience proves otherwise.

Recently someone in Germany started pulling about $300 a day out of our US bank account using our ATM card number from our US bank. This is a card we rarely use–I think we have never used it China but did use it on our trip to Italy in February 2014. the thieves struck in May 2014. They took the most they could each day for 3 days in a row before I happened to check my online bank account and notice the unexpected withdrawals. It was very fortunate that I noticed this right away instead of after our account was drained dry. Amazingly, there was no anti-fraud alert to the surprise bleeding that was underway. Bet they could have taken everything if I hadn’t noticed.

I immediately called the bank and they inactivated the card. Whether I would get the money back or not depended on one thing: did the thieves use my PIN number when making the withdrawals? If they had, then the money would be lost forever. No recourse. But because the bank in Germany that dispensed the money was not able to provide proof that the PIN had been used, my bank ruled in my favor and refunded the money.

How the thieves got money out of my account without my PIN was never explained. But it did happen, so it seems, and that means it can happen–to you! Check your account often for fraudulent charges. Use your card as little as possible. Don’t use it in shady locations–whatever that means. Assume every operation is shady and vulnerable. Guard your PIN zealously and watch for unusual attachments to ATM machines, and realize that people may be watching the keys you push, so cover the keypad and use false moves as well.

On the other hand, when PINs are just 4 characters long, someone could simply guess the PIN after enough tries with enough cards (several tries each on a thousand or more cards) and then they have a money machine. The chances of someone guessing your PIN on the first try are just 1/10,000. After 10 tries, though, it’s 1/1000. How many people have been trying to guess your PIN? Does your bank every tell you? Probably not. Your card might get inactivated with lots of bad guessing–a huge inconvenience, but better than losing everything. Check with your bank and understand their anti-fraud systems and what recourses you have to fraudulent withdrawals.

Remember, you are just 4 numbers away from disaster, and those numbers can be stolen or possibly even guessed.

By |August 18th, 2014|Categories: Consumers, Finances, Products, Scams|Tags: , , |Comments Off on You Are One Guessed or Stolen PIN Away from Disaster: Be Careful With Your ATM Card in China (or Anywhere)

Prepare For Your Trip to China With Scam-Prep 101: Beware the Karaoke Scam, the Tea Ceremony Scam, and Other Scams in China

I’ve written before about the dangers of the “Tea Ceremony Scam” in China where attractive girls or other friendly young people invite foreigners to join them as they attend a nearby traditional Chinese tea ceremony. After a few tiny samples of tea, you’ll be billed for hundreds of dollars, and there might be some tough muscular guy there to enforce payment. This scam is actually dangerous, and if you fall for it, you’ll literally be in a den of criminals. It’s one of the most common scams in China.

It is important to know that there can be several variations of this scam. An important variation has come to my attention with the recent news story in the Shanghai Daily, “15 members of karaoke crime gang detained” (June 24, 2014). In this scam, friendly people invited victims to join them in karaoke. After some entertainment, a bill was presented for something like 30,000 RMB (US $5,000). In the case in the story, the man paid $1,000, everything he had, but this was not enough, and they were forcibly taking him back to his hotel to get the rest of his money. He managed to escape on the way and get help from the police, who eventually captured the gang. But there are probably many similar gangs in operation.

Whether you are in Shanghai, Beijing, or any other place that gets significant tourism, you have to be wary of friendly strangers who want to invite you somewhere. Don’t go with them. Don’t let merchants or others lead you down isolated alleys or remote floors of buildings to see their mystery shop. Don’t let them lead you into a room where they can lock the door to prevent you from escaping–something that happened to someone I know well. Fortunately for her, they were just keeping the police away from their fake goods operation, and the woman was able to get out unharmed. But don’t take those risks. Avoid the scams in China, but recognize that the scammers can be very polished, alluring, and highly trained–they are part of a well-oiled scam machine run by real professionals who have mastered effective systems that keep duping foreigner after foreigner, making loads of money for the scamlords.

Be alert. Make sure he change people give you is real Chinese money. Make sure the expensive product you buy is actually put int he package. Make sure the cab you get into you is a real cab using a real meter. If the meter is off and they quote you a price to get to your destination, don’t accept that unless you know what the real price is and it is close enough to be acceptable to you, otherwise you can many times the real price. Don’t prepay for rides because you might get dumped off for some other low bidder to take you, only to find additional fees on the way (yeah, I experienced that).

When you’ve been robbed by falling for a scam, you’ll feel really stupid and pained by how you were used and cheated. That’s a lot of stress that you can avoid in many cases by being alert and reducing your risks.

The Chinese people are generally honest, friendly, and decent, but the handful of exceptions are the ones who will be watching for you. They are organized and know you are coming. Be ready and stay safe.



By |June 27th, 2014|Categories: China, Scams, Shanghai|Comments Off on Prepare For Your Trip to China With Scam-Prep 101: Beware the Karaoke Scam, the Tea Ceremony Scam, and Other Scams in China

Another Scam in China: Worthless Foreign Currency (and One More Sip of the Popular Tea Scam)

Thailand-currencyAn American friend of mine visiting Shanghai was shopping at Yu Yuan (Yu Gardens) and bought something from a pushy salesman on the street. He paid with a 100 RMB bill and was given several bills as change. What he didn’t notice was that the  bills he received was worthless currency from some foreign nation (he thought it looked like Arabic but I’m guessing it was from Thailand). So instead of paying 20 RMB, he paid 100. Rip off.

Make sure you know what real Chinese currency looks like so people won’t had you bogus currency for change. Look, verify, and count. Don’t be so trusting and gullible, like many of us Americans are.

Other Basic Scams at Tourist Attractions 

The day before my friend went to Yu Yuan, I warned him about some of the scams he might encountered. I told him that anytime someone approaches you there or at other major tourist sites and speaks English to you, no matter how friendly and attractive they may be, they are probably sales people whose job is to separate you from your money. I warned him that there are people who try to engage foreign visitors by asking them to take their photos, and then some sort of scam is likely to follow. Just say no politely and walk away, I said. I also warned him of the ever-popular and often successful tea ceremony scam, where gullible foreigners are lured by attractive English speaking girls to join them at a traditional tea ceremony for a cup of tea. In this scam, after a few minutes of tea, a gargantuan bill is presented, accompanied with solid Chinese muscle to enforce payment for what was allegedly a rare and exotic high-priced tea. One cup might cost you hundreds of dollars. Never fall for that, I warned. Stay away. Beware. Don’t go inside.

The next day at Yu Yuan, my friend ran into a couple of cute girls who spoke English and asked if he could take their picture. Being friendly and always wanting to help, this young man took the photos and chatted with them. “We are tourists from Beijing,” they said, “and have been to all these major Shanghai attractions on our tourist map except for one, a traditional tea ceremony right around the corner. It’s a great way to experience Chinese culture. Would you like to join us for some tea?”

“Well, I guess I can just take a look,” he said, and followed them into a tea house. But eventually, he later told me, my warnings began to enter his thinking–finally–and he realized he had better check a menu and see what the prices were before he did anything. He asked for a menu and saw that there was a 30 RMB service fee posted in addition to some high prices for the tea. But now he felt pressure to not just walk away, though he explained he didn’t drink tea and needed to leave, so how much did he need to pay for just taking a look as he had done? The waitress was puzzled and went to check with the owner, and came back saying that he needed to pay 200 RMB. That’s for absolutely nothing–what crooks. He said no way and gave them 30 RMB as I recall and left, but they were angry. I think he was lucky the muscle hadn’t shown up yet.  The result could have been much worse.

When you see young people at Yu Yuan waiting with cameras at busy corners or on busy streets, and out of all the thousands of passers-by, they choose you, the stand-out foreigner, to get someone to take their picture, know that the last thing they want is your photographic assistance. It’s a scam. Feel free to take their photo on your camera so you can let others know who these scammers are, but don’t let them lure you anywhere. They don’t want photos, just your cash. Lots of it. And they will use deception and force if you give them the opportunity.

By |March 26th, 2014|Categories: China, Scams, Shanghai, Shopping|Tags: , , , , |Comments Off on Another Scam in China: Worthless Foreign Currency (and One More Sip of the Popular Tea Scam)

Scams in China (and Beyond): Some Tips

There are many scams that newcomers here must learn to avoid. The classic scam involves English speakers inviting Westerners to come to a traditional Chinese tea ceremony. After a cup or two, there’s a bill for a huge amount, with some hefty bouncers there to enforce payment. Ouch.

Online shopping in China or with Chinese companies can be a big risk. Here is a list of Chinese retail websites that are reported to be fraudulent. One friend of mine bought a computer on one of these sites and lost his money. One of the warning signs that he should have known about: they told him they don’t accept credit cards but needed the money sent via Western Union. That’s the same as handing someone cash. No recourse. No protection. Don’t ever buy anything via Western Union payments! Ever.

If you are coming here for a job, there a plenty of crooks that will sign up foreigners for jobs here that turn out to be closer to slave labor. They promise to get a visa faster than should be possible, and some smuggle people into the country illegally or bribe an official at a “diplomatic desk” to get the victim into the country. They then keep the person’s passport, making the person completely vulnerable and at risk of imprisonment or deportation if they don’t cooperate, etc. It’s human trafficking. Don’t fall for these scams. They are aimed largely at people from less developed countries.

Remember, there are people looking for ways to exploit you. Be suspicious. Be nervous. Don’t give your passport to people you don’t trust. Don’t pay people in advance with cash. Don’t let a charming smile lure you into an out-of-the-way place where you’ll have to pay a lot for your tee, or pay even more to replace your teeth. China is a great place abounding in kind, honest people, but the few crooks here and everywhere else force us to stay on our guard at all times. Be careful.

By |February 11th, 2014|Categories: China, Scams, Shopping, Travel tips|Tags: , , |Comments Off on Scams in China (and Beyond): Some Tips