China's express delivery industry is the latest to come under the scrutiny of local news media for allegedly engaging in illegal activities.

YTO Express was criticized for selling the personal information of as many as 400,000 customers. STO Express was similarly accused.

Once customers' information was entered into STO's delivery system it was allegedly copied to another internal system and then resold. An STO Express representative responded that the company had formed a special investigation to crack down on illegal operations in collaboration with authorities. 

Similar activities have occurred at other express companies including Deppon, Yunda Express, Express Mail Service, SF Express and others.

Following The Black Market Chain  

Police in Handan, Hebei province recently found five YTO Express staff worked with outside sources to resell customers' personal information. They were paid 500 yuan ($76.19) a day for "renting out" their staff accounts to the sources who, in turn, sold personal information to criminals for telemarketing scams at 1 yuan a person. Older people are often targets.

YTO Express said it had proactively called authorities to investigate when the company's internal risk control system suggested an "abnormal situation." However, customers criticized it for its poor management and failing to secure their information. 

Police said the sale of information fueled telemarketing scams and criminal activities like kidnapping and blackmail.

Reselling personal information for profit has been a long-term problem despite local coverage of investigations. In 2013, YTO Express was exposed for leaking millions of customers' information to a website called "danhaotao." Customers can shop for delivery information. For 0.3 yuan to 1 yuan a transaction buyers can gain recipient and sender names, addresses and cellphone numbers. 

The website is still functional but claims it prohibits illegal use of information.

Producing For Click-Farmers 

E-commerce retailers, after acquiring delivery information, can "manufacture" positive reviews and eventually increase hits, an industry professional said.

The practice known as "shuadan" - click farming for virtual deliveries - was ubiquitous until 2018. Then China issued a law requiring every delivery to be filed with the sender's valid personal information and ID numbers.

Sources at STO Express told Business Times, if a delivery is scrutinized, local police can investigate the package, as the delivery system is now connected with police.

Under the stricter regulations, merchants included worthless items into packages, like paper stuffing, because they have to make an actual delivery. 

'Nonexistent Deliveries' For Money Laundering

Benefiting from convenient logistics services and fast-growing e-payments, illegal internet gambling on e-commerce platforms is on the rise - in particular during the pandemic. Gambling is illegal in China and authorities have been cracking down.

China's Ministry of Public Security called for investigation of internationally based online gambling operators catering to China customers this June and followed up by shutting 368 illegal online gaming platforms. It detected 257 crossborder gambling cases.

However, gambling organizations soon found a way to avoid the scrutiny. Police in Wuxi, Jiangsu province, arrested two people in August for selling 600 million records of nonexistent deliveries. Meanwhile, they uncovered two internet gambling cases where more than 7 billion yuan was laundered via transactions using e-commerce company Pinduoduo. 

Up to 30,000 fake stores from Lishui were using the records to fabricate shopping deals while "merchants" in Lianyungang were operating as payment providers for cross-border businesses.

Police officers told Caixin that many large internet companies are currently being investigated including China's biggest online search engine Baidu Inc., Tencent Holdings' messaging apps QQ and WeChat, Ant Group's payment service Alipay and a number of courier companies including ZTO Express, YTO Express and STO Express.