Computer Parts Site Newegg Is Being Sued For Allegedly Engaging In Massive Fraud (gizmodo.com)

schwit1 shares a report from Gizmodo: A suit filed Friday in the U.S. District Court in Los Angeles by four South Korean banks alleges "massive fraud" with an outstanding debt of at least $230 million, and California-based electronic parts seller Newegg has been named as a defendant, along with wholesaler ASI Corporation and its officers. These new documents allege that Moneual, Newegg, and ASI were engaging in "an intricate scheme of circular transactions." The banks submitted a list of over 70 pages of supposedly fraudulent orders as evidence that Newegg and ASI created the paperwork that Moneual used to secure loans. The suit further claims that Newegg and ASI "received kickbacks from Moneual in varying amounts in exchange for agreeing to collude with Moneual to defraud the Banks." One method of inflating purchase orders for Moneual -- a brand barely remembered in North America as a a low-tier entrant into the robotic vacuums market -- allegedly involved creating paperwork that showed components being sold for over 370 times their value.

Comments

Re:Is There A Point to Newegg Premier Anymore?

[MBGMorden]

Newegg's interface is still a lot better for actually finding computer parts. All of their filters are much more targeted.

That said - I'll admit that due to Prime I often go to Newegg.com, create a shopping list of what I want . . . then go over to Amazon and search the specific product names to duplicate the cart and buy from there instead.

Happening at Amazon, too

[SethJohnson]

The circle fraud you describe is absolutely happening over at Amazon. I had thought it was only to farm positive reviews and get products boosted to #1 seller status in a category, but now I suspect the manufacturers may be benefitting in other ways. As an example, do a search on Amazon for "pico projector"-- you'll find a bunch of cheapie ~$100 video projectors with hundreds if not thousands of 4 and 5 star ratings. This item is the "best seller" in the category. Check the reviews. There are two thousand reviews written by 'verified purchasers' who simply relate a few of the product features likely printed on the box and offer no comparison with competing products nor mention any possible drawbacks (like that these projectors don't display true HD resolution), and English does not seem to be the authors' native language.

i like this mini projector very much! it has really good quality and works really well~ it shows very clear and also with sounds by itself. This projector is very good, It's worth to get this!

I love this projector. when it will be in 20 ft or 10 ft image is clear that when it is in 4 to 5 ft otherwise it is really good quality in dark.

Projector is good value for money. Small, lightweight and does the job effectively. The cables and remote control are added plus. And the USB interface is really cool. You don't even need to connect is to a computer. Just plug in the USB and enjoy.

If you click through on any of these profile names, you'll see hundreds of reviews written on cheap, Asian-sourced gadgets. Never any expensive, name-brand products. And the reviewers are so prolific, they write the reviews almost every day and usually upwards of five reviews per day. It's common to see one of these fake reviewers purchase two or three knock-off fitness trackers over the course of two months, yet none of their reviews compare the multiple trackers they seemingly have recently purchased.

I can imagine that when they boost a product up to "#1 seller" status, they can get loans against projected sales volume just like these scammers did via their Newegg fraud.