National / Crime & Legal

Government urges Seven-Eleven Japan to beef up security after 7pay mobile payment fraud

Kyodo

The industry ministry has told the operator of Seven-Eleven convenience stores that its mobile payment service is not secure enough after customers were allegedly defrauded through unauthorized access and urged the company to submit preventive measures.

One of two Chinese men arrested on suspicion of attempted fraud paid ¥730,000 ($6,750) to buy 146 cartons of electronic cigarette cartridges at a Seven-Eleven outlet in Tokyo using stolen IDs for the new smartphone payment service 7pay, police said Friday.

The Ministry of Economy, Trade and Industry has determined the operator, Seven & I Holdings Co., failed to strictly follow guidelines to prevent unauthorized access and warned providers of similar services to ensure they confirm the identity of users.

The ministry has judged that Seven & I did not take sufficient measures to prevent access by people using someone else’s ID, according to the ministry.

The guidelines, formulated by the Payments Japan Association, a body that promotes cashless transactions, requires the operators of mobile payment services to confirm the linkage between the devices of users and apps downloaded on them to prevent unauthorized access.

The police arrested Chinese nationals Zhang Sheng, 22, and Wang Yunfei, 25, on Thursday and sent them to prosecutors Friday.

On Thursday, Seven & I said some 900 customers using the cashless payment service may have lost a total of ¥55 million after their accounts were hacked.

Wang was responsible for driving the vehicle used by the pair, in which 19 more cartons of e-cigarettes were found, with police suspecting these, too, had been fraudulently obtained by the same means at another store.

The incident came to light soon after Seven & I launched the smartphone payment service at over 20,000 outlets nationwide Monday.

At a Seven-Eleven outlet in Tokyo’s Shinjuku Ward on Wednesday, Zhang used the IDs of seven to eight different people to settle payments for 146 cartons of e-cigarettes, the police said.

The two Chinese men said they had received instructions from a person who had promised them a reward, according to the police.

The police quoted Zhang as saying that he had been participating in a group chat on China’s social messaging app WeChat when someone asked if there was anyone in Tokyo’s Ginza district. The person said a reward would be paid for doing some shopping.

After Zhang registered as the person’s friend, he received instructions to purchase e-cigarettes on Tuesday, the police said.

Meanwhile, Wang had been told by a relative in China that there was a part-time job available where he could make money quickly, and was put in touch with someone who said it involved “driving a car in Shinjuku.”

The men told investigators that the person who contacted them had the same WeChat alias, the police said.

The police suspect possible involvement of an international group that includes a hacker, a person who gives instructions and others who engage in the purchase and collection of the merchandise.

The police will also look into how Zhang managed to settle such a large payment at a single outlet.