Hangzhou police said the people allegedly collected $6.6 million in orders for goods that they never delivered, according to a statement posted on the website of Alibaba Group Holding. Yahoo Inc. owns a roughly 40% stake of Alibaba Group.
The arrested suspects operated by pretending to be legitimate suppliers on Alibaba.com, a business-to-business platform that helps connect Asian manufacturers with global buyers.
Alibaba.com, and its parent company Alibaba Group, have sought to reassure customers of the site’s safety. Alibaba.com’s CEO and COO both resigned in response to the fraud cases, while employees involved with the fraud were terminated. Alibaba has also paid $1.94 million to compensate buyers who were victims on the fraud.
The company has been assisting Chinese police to track down other suspects involved with e-commerce scams.