Man jailed for cheating Lazada of S$181,000 by posing as buyer and seller, asking for refunds

SINGAPORE: A man cheated e-commerce platform Lazada of more than S$181,000 over a few months by posing as both buyer and seller and asking for refunds.

Joe Lim, 23, was given 21 months' jail on Friday (Jul 16) for two counts of cheating and one count of converting criminal proceeds into property. Another three charges were considered in sentencing.

The court heard that Lazada allows independent third-party retailers to sell their products on their e-commerce site, and any seller can create an account and list products for sale.

Buyers place orders for the products listed on the site and make the necessary payments via the site, while a corresponding amount would be credited to the seller's account.

After Lazada informs sellers of the order, sellers would then deliver the goods to the buyers either on their own or through Lazada's third-party logistic partner.

Lazada processes payments into the sellers' registered bank accounts after the buyers confirm delivery and receipt of goods on the website, or upon the logistic partner's confirmation of delivery.

Typically, Lazada processes aggregated payments for a week, and these are credited into sellers' bank accounts by the following Monday or Tuesday, court documents stated.

Lazada also had a seven-day refund policy where buyers can return orders made within seven days of delivery and payments are refunded to them while the corresponding amounts are debited from the sellers' accounts on the e-commerce site. Debited amounts are usually offset by subsequent transactions.

Sometime in October 2019, Lim devised a scheme to cheat Lazada by performing what the prosecutor called a "refund fraud".

HOW HE CARRIED OUT THE REFUND FRAUD

Lim would self-trade by posing as the buyer and seller and place high-value orders with his various seller accounts, using buyer accounts he created. He would make payment for the orders with his credit cards.

He would then pack items as the "seller" and drop them off at the warehouse of Lazada's logistics partner, which would then deliver the items to Lim's home.

However, the items he packed would not correlate to the orders that were placed. When the logistics partner confirmed the deliveries, Lazada would process the payment of the credited amounts in Lim's sellers' accounts on the website to his registered bank accounts.

Lim would withdraw the money paid to his bank accounts and initiate a refund as the "buyer". He would accept the refund request as the "seller", and Lazada would refund the money to his credit card, while debiting the corresponding amount from Lim's seller account.

However, Lim would not receive any subsequent orders on this account, and Lazada would not be able to offset the debited amount from the account.

Lim had four seller accounts and seven buyer accounts on Lazada, with which he perpetuated this scheme. He cheated Lazada of between S$61,000 and S$101,000 between October and December 2019.

Lim used the money on personal expenses such as property rent, credit card bills, car repair costs, and bought a second-hand BMW coupe with part of the funds.

He then resold the car for S$45,500 in cash and used it to buy 209 second-hand laptops, which he refurbished and resold for profit.

Lazada caught wind of the fraud and lodged a report on Jun 16 last year, alleging that Lim had cheated the company by self-trading.

Lazada later offset S$80,711 from Lim's seller account, and recovered another S$6,036 from his seller account from possibly genuine transactions. However, Lim did not make any restitution of his own.

PROSECUTOR CITES SOPHISTICATION, PREMEDITATION IN OFFENCES

Deputy Public Prosecutor Matthew Choo asked for between 21 and 24 months' jail, citing the degree of sophistication and premeditation and planning.

Lim had planned his offences carefully, getting a friend to "test" the refund process on Lazada.

The victim, Lazada, is a local e-commerce industry player alongside the likes of Shopee and Carousell, said Mr Choo.

"There is a keen need to protect Singapore's position as a global e-commerce hub," he added, saying a stern sentence should be imposed to deter like-minded individuals.

"Loophole or otherwise, the accused was dissatisfied with Lazada's refund system, he exploited it for his own devious gains," said Mr Choo.

Defence lawyer Azri Imran Tan said Lim was a poor kid who has been supporting himself and his father since he was 14. His father is a single father, and Lim began using e-commerce platforms before he was 21, said the lawyer.

While he exploited the loophole to make money, Lazada has managed to claw back some sums, the lawyer said.

The judge said that while the scam was not sophisticated, the steps taken to commit the fraud were premeditated and calculated. 

For each charge of cheating, he could have been jailed up to 10 years and fined.