New-type frauds irritate food delivery app
By Kim Tae-gyu
Last year, five people in Busan registered a few fake restaurants with Delivery Nation, one of the nation’s top companies specializing in food-delivery service.
Using 60 mobile phones, they made bogus orders for food from the restaurants via Delivery Nation for four months, the total worth of which amounted to 180 million won ($150,000).
Delivery Nation allows its users to pay directly to restaurants and the five took advantage of that policy, thus reporting to the company as if the transactions actually took pace.
Unaware of the new-type sham, Delivery Nation activated its popular incentive program of letting the five collect points that are redeemable for free meals.
The five unscrupulous suspects received points worth some 50 million won and ordered food from the counterfeit restaurants. Pretending to have met the orders, they asked the firm to pay the money in cash and the request was accepted.
Suspicious of the fact that the restaurants got a total of 16,361 orders in a few months, however, Delivery Nation asked for a police investigation and the culprits were caught.
Among the five suspects of the unprecedented frauds, three were detained while the remaining two are still wanted by the police.
“First of all, we got suspicious because the number of orders was too many. In an extreme case, 10 orders made by a single smartphone in a day,” said an official of Delivery Nation.
Delivery Nation, which is a business bellwether in the local market, is operated by Woowa Brothers, the startup which attracted 40 billion won in investments in a 2014 funding headed by Goldman Sachs.
Its monthly orders totaled 5.2 million in 2014 and the figure more than doubled in two years up to 10.7 million last month. The average orders per user in a month also jumped from 2.5 times in 2014 to 3.2 times in 2015 and 3.6 times last year.
In late 2014, the service also made inroads into Japan through forging a joint venture with Naver, which operates the instant messaging application Line that is widely used in Japan.
Observers pointed out similar scams will take place as the food delivery services take firm root in Asia’s fourth-largest economy. On top of Delivery Nation, a few companies compete to lead the fast-growing market.