Man jailed for posing as buyer and seller to cheat Lazada of more than $181k

SINGAPORE — A man who created both seller and buyer accounts on Lazada to cheat the e-commerce platform of $181,525.35 was jailed for 21 months on Friday (16 July).

Joe Lim, 23, created three seller accounts and seven buyer accounts in order to trigger the refund process after transactions were supposedly completed.

The Singaporean pleaded guilty to two out of three counts of cheating and one out of three counts of acquiring, possessing, using, concealing or transferring benefits from criminal conduct. The remaining charges were taken into consideration for sentencing.

Platform allows independent third-party retailers

Lazada allows independent third-party retailers to sell their products through its website. Sellers simply had to create accounts on the platform and list their items for sale.

When buyers place orders for the items, a corresponding amount would be credited into the seller’s account on the site. Lazada would then inform the sellers of the order, and sellers would deliver the goods either through a logistic partner or by themselves.

After the buyer confirms delivery and receipt of the goods, Lazada would process the payments into the sellers’ registered bank accounts in about a week. Lazada also has a seven-day return policy which allows buyers to return orders within seven days of delivery.

Lazada would usually refund the buyers their payment and debit the same amount from the sellers’ account on the site. The debited amount would usually be offset by subsequent transactions.

Using scammed monies to buy computer software, hardware

In October 2019, Lim would pose as both buyer and seller, placing high-value orders on his seller accounts and making payment. He would then use a logistic partner to deliver the items, but these items would not correlate to the orders placed.

After the delivery was confirmed, Lazada would process payment of the credited amount into Lim’s sellers’ account to his registered bank accounts with the platform.

Lim would then withdraw the monies paid into his bank accounts, but would later initiate a refund as buyer for the order delivered.

As the seller, Lim would accept the refund and Lazada would then refund the monies paid to the bank associated with the credit card used in the transaction. Lazada would also debit the corresponding amount from the seller’s account on the e-commerce site.

Since Lim’s sellers’ account would not receive any subsequent orders, Lazada would not be able to offset the debited amount from the account.

Lim would then place orders for computer software and hardware worth tens of thousands of dollars.

Credit card chargeback requests

On 11 December 2019, Lim placed two orders worth $101,001.37 with his seller account and used the same method to ask for a refund. While the payout was processed on 16 December, Lazada realised that Lim was “self-trading” and managed to reverse the transaction.

On 20 December 2019, Lim was contacted by Lazada and informed that the site would be withholding the amount in the reversed transaction pending internal investigations.

He acknowledged and informed that Lazada may offset the outstanding amounts owed to the platform from two of his seller accounts in the withheld sum. Lazada agreed.

Around 31 January and 31 March 2020, Lim initiated two credit card chargeback requests with OCBC, alleging that the goods received were “not as described or had defective merchandise”. Lazada was unsuccessful in resisting the chargeback requests, resulting in a loss of $101,001.37.

Lim received a $79,593.52 from the fraud and withdrew the money, using it for personal expenses such as rent, credit card bills, and car repair costs.

Bought second-hand BMW Coupe, resold laptops for profit

Around 24 January last year. Lim used $44,500 to buy a second-hand BMW 335i Coupe. He sold it less than a month later for $45,500 and used the cash to buy 209 units of second-hand laptops online. He refurbished the laptops and resold it for profit.

While the total amount cheated in the proceeded charges is $101,001.37, the total amount cheated across all charges is $181,525.35. Lazada had offset $80,711.70 from Lim's seller account and recovered $6,036.20.

Lim has not made restitution.

His lawyer Azri Imran Tan told the court that Lim had been supporting himself and his single father since he was 14. Lim had found a loophole and went on to exploit it to make money, said Tan.

For cheating he could have been jailed up to 10 years, and fined. For using benefits of criminal conduct, he could have been jailed up to 10 years and/or fined up to $500,000.

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