The Hangzhou Shangcheng District People’s Court delivered a landmark verdict against a growing class of criminals in China called “malicious feedback agents” on July 3, 2013.  The Court found 11 men and one woman guilty of extorting money from online merchants on Taobao Marketplace, among other sites, by threatening to post neutral to negative buyer ratings.

The ringleader recruited his cohorts via online chat platforms and built a network of agents who never met but acted in concert.  The agents would target a merchant and order moderately priced items.  The ringleader would then step in and negotiate on behalf of the malicious buyers by demanding RMB 200-300 from the merchant in exchange for withholding negative buyer feedback.  The blackmail money, reported to be less than RMB 3,000 in total, was shared by the ringleader and his agents.

E-tailing is a fast-growing business sector in China. Perhaps more than in any other country, Chinese online shoppers rely heavily on buyer ratings and word of mouth to guide their purchase decisions.  The importance of peer-to-peer recommendations makes online merchants especially vulnerable to malicious feedback, whether from competitors or outside agents.

To ensure that its online shopping platforms constitute a fair and safe marketplace, Taobao works closely with the authorities to contain malicious feedback activities. Taobao also implements countermeasures such as opening a direct reporting channel, in addition to making policies and user regulations to protect the interests of buyers and sellers.

A senior executive of Taobao Marketplace responsible for information security said the countermeasures resulted in the interception of more than 100,000 malicious orders and the penalizing of 65,000 malicious buyer accounts in 2012. The number of complaints lodged via telephone calls regarding malicious feedback and extortion was reduced by more than 90 percent by the end of last year.