How Did the Milk Tea Shop Group Buying Fraud Work?

A bubble tea franchise store in Wuxi ran community group buys and membership top-ups that authorities suspect were large-scale fraud. More than a thousand local residents are reported as victims, with transaction flows approaching 200 million yuan, and cases have also surfaced in Shanghai, Zhejiang and Anhui. The operator's compulsory measures were changed because of pregnancy, yet the shop kept selling low-priced products afterward.

The brand announced termination of cooperation and removed the signboard, but the store changed its name and stayed open while continuing to recruit. Former employees said wages went unpaid and veteran staff left one by one. The case highlights risks in prepaid group buying, where discounts on drinks and other goods pull in top-ups before any goods are delivered.

A bubble tea franchise store in Wuxi appears to run community group buys and membership top-ups on the surface, but behind the scenes it is suspected of large-scale fraud. Over a thousand local people have fallen victim, with transaction flows approaching 200 million yuan, and victims have also emerged in Shanghai, Zhejiang, Anhui and other places. More unexpectedly, the operator had her compulsory measures changed due to pregnancy, yet continued to operate and sell low-priced products afterward. The brand eventually announced termination of cooperation and dismantled the signboard, but the store simply changed its name and stayed open, still constantly recruiting. What exactly is going on? What should ordinary consumers and job seekers watch out for?

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Recently, a Wuxi resident posted on social media, reminding young job seekers looking for part-time work to be wary of a local bubble tea shop.

According to the post, this bubble tea shop opened in 2022, initially a franchise outlet of a local chain brand. But later all the veteran employees left one after another, and the operator kept hiring new people to keep it running. The poster also mentioned that once new employees discover problems, their wages are simply not paid, and the shop has already owed wages to six or seven employees.

After the post went up, it not only drew onlookers but also prompted many local residents to leave comments with revelations.

Nearby residents said that because the franchised bubble tea brand has some local recognition, the shop did good business when it first opened, with many people coming to spend money, and some customers registered as members and joined the store's community group.

However, members in the group revealed that the operator claimed to have access to many high-quality product supply channels, and long posted low-price group-buy information and buy-one-get-one promotions for various popular products to members through the community, attracting people to top up memberships and place orders for other products.

This community group-buy model operated for two years, until early January this year, when someone in the group sensed something was wrong, and multiple victims went to the Nanzhan Police Station in Xinwu District, Wuxi, to report the case.

According to the police station's investigation, there were over a thousand victims deceived by the bubble tea shop owner in Wuxi alone, with transaction flows approaching 200 million yuan, and there were also victims in Shanghai, Zhejiang, Anhui and other places. On January 19, the public security organ formally opened a case on suspicion of fraud.

(Image source: from the netizen who exposed it)

Unexpectedly, on January 21, when the investigating police were preparing to take the person involved to the detention center, she claimed she was already pregnant. This changed the original case-handling procedure, and the person involved had her measure changed to residential surveillance due to pregnancy, then obtained bail pending trial after it expired.

Even so, the person involved did not stop, continuing to sell so-called special-channel low-priced products to members, and the shop involved continued to operate as usual.

Netizens said that during this period, uninformed consumers still joined the shop's community, topped up memberships and bought low-priced products. People familiar with the matter revealed that although the amount involved is still being audited, a rough estimate suggests it may actually reach 300 million yuan.

(Images provided by a deceived netizen in March this year)

As the incident continued to escalate, the reputation of the franchised brand was severely affected. On the evening of November 5, the brand announced on social media that it had terminated cooperation with the person involved and issued a related statement, while forcibly dismantling the shop's signboard and requiring the store not to continue using any materials printed with the brand logo.

However, from photos recently taken by nearby residents, the shop has changed its signboard and continued operating, and its store name on third-party platforms has also been changed.

In addition, residents also revealed that due to a shortage of staff, the shop has been continuously recruiting new employees. Unknowing job seekers who join are highly likely to encounter situations such as the operator withholding wages. Therefore they remind job seekers to be highly vigilant when they see recruitment information for this bubble tea shop, and not to be deceived.

Image source: Xiaohongshu

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The above content is compiled by CoffeeHunters, a coffee news website.