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What Should Be Done to Deal With Pinduoduo's Glitch-Caused Losses?
A glitch-caused coupon loss happening to pinduoduo triggered discussions on how to deal with similar incidents
  ·  2019-01-28  ·   Source: NO. 5 JANUARY 31, 2019

(LI SHIGONG)

On January 20, Pinduoduo, a Chinese e-commerce platform where buyers can get discounts by shopping as an online group, announced that it had suffered losses of millions of yuan due to an uncontrolled avalanche of discount coupons online. Due to a glitch in the company's computer system, users were able to top up their phones by 100 yuan ($14.74) while paying only 0.4 yuan ($0.06) and many users used this opportunity to top up their phones multiple times.

In a statement on its official account of China's leading microblog platform Weibo on the following day, Pinduoduo said it had rectified the problem and reported the incident to police. It also said it was tracking the online orders that used those coupons.

Such glitch-caused catastrophes, though rare, did happen. In early 2018, Tencent, China's Internet giant, took a hit because its system was exploited by some underground chains. In such cases, usually, the businesses have to bear the losses themselves, with the fraud going unsolved.

This time, the extremely large loss Pinduoduo sustained has triggered heated discussions. According to the police in Shanghai, where Pinduoduo is headquartered, if there is evidence to show an underground chain was discovered, the involved group can be punished for fraud. Since this is the era of artificial intelligence (AI), people are concerned about crises that can be caused by glitches in computer systems.

At the same time, some say that some non-criminal individuals also came across these coupons and used them in good faith. So should they also be punished? Also, what is the role of the law in preventing and preempting such incidents?

Take more precautions

Tu Zipei (tech.sina.com.cn): Different economic forms, whether they are old or new, always have some flaws. The new economy is a kind of virtual economy that is based on big data, algorithms and logistics. Here, AI plays a crucial role. But the problem is, at the present stage, AI lacks basic common sense. Once mistakes are made, disasters will follow.

In conventional department stores, it's impossible that shop assistants will mistakenly issue so many coupons. However, if such a mistake does occur, the coupons can't be tracked. But since we live in a digitalized time, these coupons are traceable digitally. Pinduoduo can negotiate with consumers who have got the coupons so as to minimize its losses.

This is not the first time that a glitch caused chaos. Online shopping platform Taobao was once hit by this problem. As an e-commerce platform, Pinduoduo should adopt more measures to deal with such problems.

Zhang Shule (tech.sina.com.cn): This time, the glitch is so big that it's even likely to endanger this online discounter's very survival. Obviously, those who exploited the loophole did something wrong. Not only online collectives but some individuals also took advantage of the floating coupons. The huge loss will win Pinduoduo sympathy from the online shopping industry and platform users. Its efforts to block these discount vouchers and take legal action against the underground chain will not affect its image.

It has already announced that the 100-yuan coupons will be replaced with 5-yuan ($0.74) coupons. Since the 5-yuan coupons are also a windfall, most consumers will not take Pinduoduo to task. A small number of consumers may try to sue but that will not do too much harm either. It all depends on the platform's capability to deal with such crises.

Chang Sha (The Beijing News): In this case, consumers who got only a few coupons should not be punished. As the victim, Pinduoduo has the right to stop the transactions and consumers should cooperate. But in cases where a third party is involved, Pinduoduo needs to negotiate.

Those who grabbed a large number of coupons actually stole Pinduoduo's assets through the glitch and should be held criminally responsible. Since the glitch was maliciously exploited, those involved in this act can be held on criminal charges.

Xu Gang (Jinan Times): According to Alibaba, in 2018, hundreds of professional illegal chains were active online. They were involved in various illegal acts, such as registering false accounts, exchanging and trading in illegal technologies, phishing, spreading malware and stealing others' accounts. The Pinduoduo incident is not only a corporate cybersecurity crisis but also a crisis of individuals' personal information security.

Today, you are standing by and reading this news and probably tomorrow, your personal information will be leaked. So we hope that this incident will be properly handled through legal channels. As for the public, they need to stop speculating online for gaining petty advantages.

Let the law act

Ouyang Chenyu (www.thepaper.cn): Those who benefited from Pinduoduo's glitch see these coupons as a stroke of luck. The coupons were not physically stolen or plundered from Pinduoduo but became available because its system was flawed. However, from the legal perspective, the coupons are illegal gains. According to the General Provisions of Civil Law, they were obtained through civil acts based on a serious misunderstanding. Thus, the coupons can be declared invalid. So if the law is strictly executed, the coupon hoarders will find that they rejoiced too soon.

Did the chaos happen because of Pinduoduo's own system glitch or was it robbery by an illegal chain? We have to wait for the investigation results.

The Internet economy is based on the rule of law. Illegal chains should not be tolerated. Pinduoduo should learn a lesson and strengthen its security measures. More importantly, law enforcement departments should also effectively determine what really happened and who should be held responsible.

Mao Jianguo (Jinan Times): Even if there were loopholes in this online platform's computer system, did it deserve to be defrauded? When a house is burgled, can the inhabitants be told they can't call the police if the house doesn't have burglar-proof doors? Do you think it's reasonable?

However, the Pinduoduo incident is by no means the only one of this kind. So if no tough measures are taken, it would be very dangerous for other online shopping platforms as well.

If Pinduoduo does not take up legal weapons to protect itself, then probably such malicious cyberattacks will surge in the future. Businesses are sometimes taken advantage of due to security loopholes, but when exploiting loopholes increasingly becomes a specialized "profession," every business is likely to be hit by underground chains.

Jiang Debin (www.wuhougov.com): There are always some people who try to take advantage of online business platforms. They target coupons, point redeeming and even the minimum 1-yuan ($0.15) fee for sharing bicycles. If some individuals alone were doing this and if they did not go too far, the online platforms would not be ruffled.

However, these platforms are now faced with illegal chains, which are like vampires sponging on these platforms. They've caused huge losses to these platforms and infringed on ordinary users' legitimate rights.

According to Pinduoduo's announcement, these underground chains stole coupons worth millions of yuan. In normal conditions, users receive a limited amount of coupons every year. This time, the illegal collective may have registered false accounts with false personal information to start the flood of coupons.

China's cybersecurity industry was valued at 45 billion yuan ($6.53 billion) in 2017, but the underground chain might be twice that size. The large-scale and rare Pinduoduo theft sheds light on the large scale of the chains and how dangerous they are to online businesses. They have amassed so much dark power that the law enforcement departments need to snap into action. These chains are facing a crackdown but as they are disguised and well hidden, fighting them poses a big challenge to the police. It needs cooperation across various departments.

It's equally important for online platforms to fix system loopholes and for various departments to protect individuals' personal information by improving cybersecurity coordination mechanisms.

Copyedited by Sudeshna Sarkar

Comments to dingying@bjreview.com

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