This article is reposted from The Paper and Xinhua News Agency.
5 college students caused more than RMB 200,000 in losses to Yum Brands, the owner of the KFC brand.
On May 11, The Paper reported, citing Shanghai's Xuhui District People's Court, that the court recently heard the case. Five defendants, including Xu, were sentenced to fixed-term imprisonment ranging from two years and six months to one year and three months, and were also fined, for fraud and teaching criminal methods.
Discovering the loophole and sharing the “benefits”
Xu, born in 1998, was a student at a university in Jiangsu. In April 2018, while ordering food through KFC's app, Xu accidentally discovered two “money-making tricks.”
The first method was to place an order in the app using a combo voucher and let it enter pending-payment status without paying. Then, he would request a refund for the voucher through WeChat and afterward cancel the earlier app order. At that point, the voucher would unexpectedly reappear in the app, allowing him to obtain a voucher without paying anything.
The second method was to first place an order in the app using a combo voucher and leave it pending payment, then refund the voucher on WeChat, and then use the voucher to complete payment in the app. This would successfully generate a pickup code, effectively letting him get a combo meal without paying anything.
After discovering the loophole, Xu was “overjoyed.” Starting in April of that year, in addition to using the method for his own orders, Xu also started a “side business”: selling the fraudulently obtained combo meals to others at discounted prices through online trading platforms for profit.
At the same time, he shared the “benefits” with classmates, teaching the method in person or online to four other students, including Ding. By the time the case came to light in October that year, Xu's conduct had caused more than RMB 58,000 in losses to Yum Brands, while the other four caused losses ranging from RMB 8,900 to RMB 47,000.
Case classification: fraud
The Xuhui court found that, regardless of the specific method used, the defendants committed the offenses by exploiting data desynchronization in the system, rather than any mechanical malfunction or inherent defect in the system itself, and that their conduct was deceptive.
Accordingly, the court held that by initiating sham transactions to obtain voucher refunds, the defendants caused the “people” behind KFC's app and WeChat self-service ordering system—the “machine”—to form a mistaken understanding due to the data desynchronization, and based on that mistaken understanding to “voluntarily” dispose of property, thereby causing financial loss to the victim company. Therefore, the defendants' conduct met the elements of the crime of fraud.
In summary, the court found that the defendants knew there was a data desynchronization loophole in KFC's app and WeChat self-service ordering system under Yum Brands, yet still carried out sham transactions for the purpose of illegal possession and thereby unlawfully obtained property. Their conduct was therefore determined to constitute fraud.
After hearing the case, the court found that defendant Xu, for the purpose of illegal possession, defrauded a corporate victim of property in a relatively large amount and also taught criminal methods to others. His conduct therefore constituted both fraud and teaching criminal methods. Xu voluntarily surrendered and truthfully confessed to both offenses, constituting voluntary surrender, and he was accordingly given a lighter punishment under the law for each offense. Because Xu committed multiple crimes before judgment was pronounced, the law required a combined punishment. Xu also actively compensated the victim company for its losses and obtained its forgiveness, which the court took into account in giving a lighter sentence.
Based on the facts, nature, circumstances, and social harm of the crimes, the Xuhui court found Xu guilty of fraud and sentenced him to two years of fixed-term imprisonment and a fine of RMB 6,000; found him guilty of teaching criminal methods and sentenced him to 10 months of fixed-term imprisonment; and decided on a combined sentence of two years and six months of fixed-term imprisonment plus a fine of RMB 6,000.
The other four defendants, including Ding, were also found guilty under the same case theory—either fraud alone or both fraud and teaching criminal methods—and were sentenced to fixed-term imprisonment ranging from two years to one year and three months, along with fines ranging from RMB 4,000 to RMB 1,000.