WeChat Ticket Scam Causing Headaches for Australian Tourism Businesses

According to a report by ABC News Australia, a popular scam on Chinese messaging platform WeChat is causing hundreds of thousands of dollars in costs for tourist attractions in Australia. The scam leverages the popularity of pre-purchased tickets in the Chinese tourism market, stolen credit cards, and WeChat payments to sell tickets obtained with illicit funds. For one Australian tourism company quoted in the report, 13 percent of all online tickets sold in March were fraudulent.

With the introduction of mobile payments on WeChat, China’s most popular messaging platform quickly evolved into a commerce platform where companies have set up stores to sell products and services directly to WeChat’s hundreds of millions of active users. However, it has also become a common platform for transactions between individuals, whether it’s for splitting a bar tab, or in exchange for products and services. Over Chinese New Year this year alone, WeChat users sent 46 billion “red envelopes”—digital envelopes filled with cash—to each other. However, such WeChat transactions have also given way for WeChat users who sell illegal goods, as well as lead to real-money gambling on the platform.

On WeChat, verifying the authenticity of goods sold by individuals can be difficult as the platform doesn’t offer any customer review system or similar verification mechanisms seen on most online market platforms.

In the case of the WeChat ticket scam, which is currently causing damage to Australian tourism businesses, the situation is even more convoluted than sellers simply selling fake tickets. Instead, the scam perpetrated against Chinese travelers and Australian tourism businesses involves stolen credit cards which are used by the sellers to acquire authentic tickets, which in turn are sold at a discount to WeChat users. The result is that travelers who buy the tickets, in fact, receive authentic online tickets for tourist attractions in Australia that they can use during their travels. However, Australian tourism businesses targeted by the scam find themselves liable to refund these fraudulent ticket purchases to the bank as soon as the credit cards are flagged for fraudulent activities. At that point, the tickets have already been issued for use, and the scammers have converted stolen credit card funds into balance in their digital WeChat wallets with no clear trace back to the stolen credit cards.

Chinese travelers, who have unknowingly been made an accessory to credit card fraud, remain unaware that the tickets they purchased at a discount were illicitly obtained.

Victorian Chamber of Commerce and Industry CEO Mark Stone told ABC that the scam was first detected two months ago, but that he believes that it could continue to affect tour operators across Australia. It also remains unclear if the scam is limited to targeting Australian tourism businesses, or if it’s just the tip of the iceberg of a larger operation that’s targeting China’s booming international tourism market.

“We’ve spoken to nine operators, and this scam has cost them AU$400,000, but it is probably much more because it’s likely many operators are unaware of this scam and have therefore been caught out,” Stone told ABC reporters.

Jeremy Johnson, former chairman of Victoria’s tourism council, said that the scam is almost impossible to detect, quoting the enormous size of the Chinese online ticket market as one of the reasons to why it’s a difficult crime to prevent.

For tourism businesses, the ticket scam puts them in a precarious situation. While they have no choice but to refund fraudulent purchases, canceling tickets associated with these purchases would only end up harming travelers unwittingly caught up in a scam, and in turn, may damage the business’ reputation among Chinese tourists. In Australia, Chinese tourists now account for the second-largest tourism market and it’s poised to overtake New Zealand for the number one spot perhaps as early as this year—making the prevalence of fake tickets in the Chinese market a particularly serious problem for Australia’s tourism industry.

While Australian tourism officials believe that the recent revelations are only the tip of the iceberg, it remains to be seen if the scam will start to emerge in other destinations popular with China’s connected travelers.

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Market Analysis, Tech