AI-Generated Fake Product Images Used for E-Commerce Refund Fraud
Since August 2025, consumers in China have used AI image generation tools to fabricate product damage photos and submit fraudulent refund requests to major e-commerce platforms. Testing by a news reporter found that merchants and platform systems frequently failed to detect the AI-generated fake images and approved refunds, causing merchants to lose both goods and shipping fees.
What happened
Since August 2025, consumers have used AI image generation tools to create fake photos of product damage and submitted them to e-commerce platforms to request refunds without returns. The AI-generated images typically added visible damage such as cracks, stains, or mold to photos of intact products like socks, cups, toys, scissors, face masks, and clothing.
A reporter tested AI image generation on four products across Pinduoduo, Taobao, and JD.com, generating damage photos in approximately 20 seconds. After removing watermarks, the reporter sent the images to merchant customer service claiming product quality defects. Merchants failed to identify the fabricated nature of the images and most proactively offered compensation or replacement. Pinduoduo's automated system also independently approved the refund request.
Reported impact
Merchants face losses in both goods and shipping fees when refund-without-return requests are approved. The reporter achieved a 75% success rate in obtaining merchant compensation without detection. Merchants report difficulty and high costs in training customer service staff to identify AI-generated images.
Index analysis
The incident exploits a gap in e-commerce platform refund policies and merchant verification capabilities. The low technical barrier for AI image generation (20 seconds) versus the high cost and expertise required for merchants to detect fabrication creates an asymmetry that facilitates fraud.
E-commerce platforms that approve refunds without adequate verification of image authenticity enable the fraud. However, platforms also face pressure from their own rating mechanisms, where refund dispute rates affect merchant credibility scores, incentivizing merchants to accept fraudulent claims rather than dispute them.
Governance controls
In April 2025, major platforms including Pinduoduo, Taobao, JD.com, Douyin, and Kuaishou adjusted their refund policies, moving from platform-enforced 'refund-only' mechanisms to merchant-controlled handling. However, consumers can still request refunds without returns through merchant negotiation.
Classification
Sources and evidence
This record was researched and written by the Index, based on the following original reporting.