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Fraudsters Exploit Economic Distress in China’s Isolation Challenges
BEIJING (Reuters) – In a twist reminiscent of the South Korean series “Squid Game,” swindlers in China are targeting individuals facing financial hardships in the context of a faltering economy, offering various deceptive schemes promising prize money, debt restructuring, and other unrealistic expectations.
While the scenarios of these “self-discipline” challenges lack the life-or-death stakes of the television show, participants often find themselves victims of fraudulent practices. Many of those involved in isolation challenges, where they pay substantial fees to stay confined within a room and adhere to strict rules for a chance to win significant cash prizes, are discovering that the promised rewards frequently fall short of reality.
The challenges, advertised primarily on Douyin (the Chinese equivalent of TikTok), have surged in popularity this year as economic growth in China slows, marking its lowest pace in over a year in the third quarter. This slowdown has prompted the government to unveil new strategies aimed at enhancing household income and stimulating the economy.
Participants in these challenges face a lengthy list of regulations, including restrictions on bathroom breaks limited to 15 minutes and rules preventing them from manipulating the alarm clock more than twice daily. Many have expressed frustration when they are disqualified on the first day due to alleged infractions captured by surveillance footage, disputing the organizers’ claims.
In a recent case in Shandong province, a court mandated that an organizer refund 5,400 yuan ($740) to a participant identified only as Sun. The court’s decision cited the contract as unfair and asserted that it “violated public order and good morals.” Sun had aimed to win 250,000 yuan by enduring a 30-day challenge, which included stringent prohibitions against smoking, using electronic devices, consuming alcohol, and any external contact.
On the third day of the challenge, organizers claimed Sun had broken the rules by covering his face with a pillow, an act they deemed a violation of the regulations.
Regulatory bodies, including the Cyberspace Administration of China and ByteDance, which owns Douyin, have not responded to requests for comment regarding the ongoing issues with these challenges. In the meantime, the National Financial Regulatory Administration (NFRA) has issued warnings to the public about fraudulent “debt intermediaries” falsely claiming to offer assistance in restructuring debts or enhancing credit scores.
These self-styled intermediaries often promote their services via phone calls, text messages, flyers, and social media advertisements, asserting they can secure new loans or provide temporary financial support. However, the NFRA has cautioned that such services typically come with exorbitant fees, reaching as high as 12% of the total loan value.
Moreover, individuals might be charged hefty fees under the guise of helping them repair their credit history, with the NFRA alerting borrowers that their personal data could also be compromised or sold as part of these dubious transactions.
The financial landscape in China has been increasingly strained, with household loans reaching a staggering total of 82.47 trillion yuan ($11.3 trillion) in November, according to the latest data from the central bank.
($1 = 7.2988 renminbi)
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