(Yicai Global) May 15 -- Chinese authorities have launched investigations into illicit redemptions of coupons local governments have issued to residents to boost consumption to cushion the economic impact of the Covid-19 pandemic.

Unscrupulous operators exploit technical loopholes to gain profits through resales of or fake transactions in the vouchers, National Business Daily reported today. According to official data local governments issued a total of CNY19 billion (USD2.7 billion) consumption coupons. 

Some use technologies to get hold of masses of the chits and resell them, though local governments have already set technical restrictions on coupon allocation to stop this, the report added.

Merchants also buy the slips from those with no intent to use them for actual consumption, thereby profiting from these sham transactions. A grocery store owner in Shaoxing on Shanghai’s western outskirts gained over CNY10,000 (USD1,410) in a month this way in a case police are now probing.

The commerce bureau in Zhengzhou in central Henan province banned the exchange of information on how to turn the gift certificates into cash using social media. The agency is keeping tabs on unusual transactions using Big Data by, e.g. detecting the use of high-value vouchers in small shops.

The real-name verification and risk-control capability of Alipay, the online payment platform run by Ant Financial Services Group under tech titan Alibaba Group Holding ensures the identities of users and prevents information-sharing or group-registration to get hold of the gift tokens.

Alipay will also help law enforcement crack down on sellers’ violations of rules and customers’ bogus transactions, it said.

Editor: Ben Armour