Scammers in China are using AI-generated photos to get refunds

I don’t want to admit it, but I spent a lot of money online this holiday shopping season. Unsurprisingly, some of these purchases did not meet my expectations. The photo book I purchased was damaged in transit, so I took some photos and emailed them to the merchant and got my money back. Online shopping platforms have long relied on photos sent by customers to confirm the legitimacy of refund requests. But generative AI is now starting to break this system.

Very suspicious pinch

On the Chinese social media app RedNote, WIRED found at least a dozen posts from e-commerce sellers and customer service representatives complaining about the AI-generated refund claims they received. In one case, a customer complained that the bed sheet he purchased was torn into pieces, but the Chinese characters on the shipping label looked like crap. In another, the buyer sent a photo of a coffee cup with cracks resembling paper tears. “This is a ceramic cup, not a cardboard cup. Who could tear a ceramic cup into layers like this?” The seller wrote.

Merchants report that there are a few product categories where AI damage images are being abused more than others: fresh groceries, low-cost beauty products, and fragile items like ceramic mugs. Often, sellers do not ask customers to return these goods before issuing a refund, making them more vulnerable to fraud.

In November, a merchant who sells live crabs on Douyin, the Chinese version of TikTok, received a photo from a customer that made it appear as if most of the crabs she bought had actually arrived dead, while two others had escaped. The buyer even sent videos showing the dead crabs being stabbed by a human finger. But something was off.

“My family has been raising crabs for more than 30 years. We have never seen a dead crab with its legs facing upwards,” vendor Gao Jing said in a video she later posted on the Douyin website. But what ultimately exposed the hoax was the sex of the crabs. There were two males and four females in the first video, while in the second clip there were three males and three females. One of them also had nine legs instead of eight.

Gao later reported the scam to police, who determined that the videos were indeed fabricated and detained the buyer for eight days, according to a police notice that Gao posted online. The case attracted widespread attention on Chinese social media, in part because it was the first known AI refund scam of its kind to trigger a regulatory response.

Reducing barriers

This problem is not unique to China. Forter, a New York-based fraud detection company, estimates that AI-processed images used in refund claims have increased more than 15 percent since the beginning of the year, and continue to rise globally.

“This trend started in mid-2024, but has accelerated over the past year as image creation tools have become more widely available and incredibly easy to use.” says Michael Reitblat, CEO and co-founder of Forter. He adds that AI doesn’t have to do everything right, as front-line retail workers and refund review teams may not have enough time to scrutinize every image closely.