Some ways of countering fraud committed using digital payments according to the legislation of Russia and China

Sergeeva Anzhelika Anatol'evna PhD in Law Associate Professor, Department of Criminal Law and Procedure, St. Petersburg Institute (Branch) All-Russian State University of Justice 190000, Russia, Saint Petersburg, Baskov lane, 16 lokhi@yandex.ru Other publications by this author     Gurev Mikhail Sergeevich PhD in Law Associate Professor, Department of Criminal Law and Procedure, St. Petersburg Institute (branch) of the All-Russian State University of Justice 190000, Russia, St. Petersburg, Baskov Lane, 16 lokhi@rambler.ru Kirillova Yana Maksimovna PhD in Law Associate Professor, Department of Criminal Law and Procedure, St. Petersburg Institute (branch) of the All-Russian State University of Justice 190000, Russia, St. Petersburg, Baskov Lane, 16 lokhi@rambler.ru Other publications by this author     Pyatkova Oksana Vladimirovna PhD in Law Associate Professor, Department of Criminal Law and Procedure, St. Petersburg Institute (branch) of the All-Russian State University of Justice 190000, Russia, St. Petersburg, Baskov Lane, 16 lokhi@rambler.ru Other publications by this author     Feizullaev Firudin Makhramali Ogly PhD in Law Associate Professor, Department of Criminal Law and Procedure, St. Petersburg Institute (branch) of the All-Russian State University of Justice 190000, Russia, St. Petersburg, Baskov Lane, 16 lokhi@rambler.ru Other publications by this author

Lototskii Anton Sergeevich Senior Lecturer, Department of Criminal Law and Procedure, St. Petersburg Institute (branch) of the All-Russian State University of Justice 190000, Russia, St. Petersburg, Baskov Lane, 16 lokhi@rambler.ru Other publications by this author

Fraud committed using electronic means of payment is one of the crimes that have arisen in connection with the rapid development of electronic technologies, the improvement of the system of non-cash payments with the participation of citizens and organizations, the penetration into everyday life of various technical devices that simplify the circulation of funds. Having originated almost simultaneously with the advent of remote means of selling goods, this form of criminal activity began to develop dynamically and, complicated simultaneously with the improvement of non-cash payment security systems, gradually acquired a cross-border character. In this regard, the process of countering the theft of funds is quite difficult.

As you know, during the Covid-19 pandemic, remote purchase and sale of goods began to enjoy wide popularity: restrictions on the turnover of consumer goods were introduced in almost all states, trading enterprises and catering establishments did not work, contact forms of service provision were not carried out. For many citizens, their remote purchase turned out to be in demand, since non-cash payments had become quite familiar by that time. 

So, already by the end of 2018 in Russia, more than 56% of payments were made by non-cash method: using payment cards, mobile applications for smartphones, remote online sales mechanisms; at the same time, the total amount of payments exceeded 22 trillion rubles ^[1]. In China, the value of the e-commerce market in 2018 exceeded 600 billion yuan, and more than 3 million people were involved in its maintenance ^[2]. Under such circumstances and at sufficiently high growth rates (in the Russian Federation they exceeded 40%, in the PRC 72%), the risk of embezzlement of funds increases, which means that the tools providing access to them should receive further technical protection and legal protection. During the pandemic, the volume of e–commerce and the share of non-cash payments increased both in Russia and in China (in China in 2021, payments were made using bank cards in the amount of 1 trillion yuan, online payments - in the amount of 2.35 trillion yuan; in Russia, the share of non-cash payments reached 78% in 2022). At the same time, a steady increase in the number of thefts committed using illegal access to electronic payment systems was recorded in both countries.

The study of the features of countering fraud committed using electronic means of payment is of interest, since such crimes are characterized by stable repeatability and negative dynamics. The comparison of the Russian and Chinese experience, in turn, is considered by the authors as an effective methodological tool, since both countries are economic partners, are currently overcoming the consequences of the sanctions policy, and are developing Eurasian cooperation mechanisms. At the same time, using the example of the PRC, it is possible to identify certain parameters of legal regulation that deserve attention when improving Russian legislation. In this regard, along with the recognized methods of dialectical cognition, a comparative legal method with a limited country-specific sample was used during the study.

In order to counteract offenses committed using electronic means of payment, the law "On Electronic Commerce" was adopted in the People's Republic of China, which entered into force on January 1, 2019. The right to conclude transactions using electronic means of payment arises after the mandatory registration of entrepreneurial activity. This rule also applies to entities engaged in the sale of goods and services on social networks. Microbusiness must be registered in the territory of the People's Republic of China, and its owner must register as a taxpayer. E–commerce platforms are required to ensure that such persons post publicly available information about themselves, and, if necessary, information about obtaining a license. For citizens of the People's Republic of China, the procedure for accessing transactions on electronic platforms is simplified: they can obtain a special permit to engage in entrepreneurial activity using the Internet by registering an individual enterprise (in this case, office rental is not required, but off-line activities are prohibited). At the same time, persons who sell goods of their own manufacture or regularly provide paid services of low cost that do not require licensing are not required to register as an individual entrepreneur. Foreign citizens get the right to conclude transactions on electronic platforms after the creation of a limited liability company, which involves renting an office, accounting support of the business. In accordance with the Law "On E–Commerce", consumer rights are also protected: entrepreneurs are obliged to send electronic invoices (invoices) to each client, which serve as confirmation of payment for goods and services, and owners of electronic platforms are required to monitor compliance with consumer rights. The largest electronic platforms in China (Taobao, JD) have been operating under such rules for more than five years, but these rules were approved not by law, but by a departmental regulatory legal act – an order of the Ministry of Commerce of the People's Republic of China. In fact, the owners of electronic platforms can be likened to self-regulating organizations, the practice of establishing which has developed in various areas of the Russian business environment (construction, etc.).

For comparison, in Russia, registration of the "self-employed" is being introduced as an experiment - persons engaged in the provision of paid services without registration as individual entrepreneurs. For these purposes, a special law has been adopted, and an experimental tax on the income of such persons is being collected. The payers of this tax carry out business activities without registration, do not have an employer and do not attract employees. In particular, they can maintain a customer base or advertise goods, works, services sold using the Internet, perform settlement operations using electronic means of payment. However, unlike the above provisions of the Law of the People's Republic of China, which are of preventive importance, in Russia such a regulatory legal act has been adopted mainly to increase tax discipline and ensure that such citizens fulfill the obligation to pay taxes and fees on their income.

It seems that the Plenum of the Supreme Court of the Russian Federation, which interpreted the signs of special types of fraud in the fall of 2017, was ahead of the legislative initiative implemented in the spring of 2018 and led to the inclusion in Article 158 of the Criminal Code of the Russian Federation of the qualifying feature "from a bank account, as well as in relation to electronic money". Recognizing these acts as a grave crime, the legislator relied on paragraph 17 of the resolution of the Plenum of the Supreme Court of the Russian Federation. However, if the wording of Article 159.3 of the Criminal Code of the Russian Federation at the time of its adoption included the mandatory feature "the use of a fake or a credit, settlement or other payment card belonging to another person by deceiving an authorized employee of a credit, trade or other organization", which allowed such an interpretation, then at the moment the situation is different. The objective side of fraud using electronic money in Part 1 of Article 159.3 of the Criminal Code of the Russian Federation is not disclosed in detail. It follows from this that, guided by the rules for distinguishing this type of fraud from theft, the law enforcement officer will qualify illegal access to funds credited to the balance of a payment card, electronic wallet or other virtual payment system as secret theft of someone else's property. According to Article 159.3 of the Criminal Code of the Russian Federation, it becomes possible to qualify only those actions that involve the implementation of cyber attacks, the use of special equipment that allows access to personal information about the cardholder, making online payments using falsified versions of the websites of e-commerce operators.

However, the above-mentioned actions are covered by the composition of illegal access to computer information (Article 272 of the Criminal Code of the Russian Federation) or the composition of illegal turnover of means of payment (Article 187 of the Criminal Code of the Russian Federation), which can also cause difficulties for the law enforcement officer. Moreover, some authors believe that the use of equipment that allows obtaining information about the status of electronic payment card holders' accounts (for example, during skimming) is covered by the theft, just as it is recommended by the Plenum of the Supreme Court of the Russian Federation when qualifying withdrawal of funds through an ATM in the absence of an employee of a credit institution being misled ^[3].

Proceeding from this, it can be concluded that in the process of improving legislation in the Criminal Code of the Russian Federation, two prohibitions of the same structure were formed (paragraph "d" of Part 3 of Article 158 of the Criminal Code and Part 1 of Article 159.3 of the Criminal Code of the Russian Federation) with different sanctions in severity ^[4]. As a result, illegal access to funds credited to the balance of a payment card or in circulation of electronic payment systems qualifies as secret theft of someone else's property, even if the information necessary for this was obtained from their owner, who is under the influence of deception or delusion.

For comparison, in the objective side of the crime under Article 196 of the Criminal Code of the People's Republic of China, such a characteristic of the act as the implementation of fraudulent activity is used. This also allows us to conclude that this crime is committed only in an active form. In general, such a construction of the corpus delicti allows it to be recognized as completed at the time of the commission of actions, regardless of whether the withdrawal of a sum of money from legal possession took place. In other articles of the Criminal Code of the People's Republic of China (for example, in Article 265), the wording "taking by fraud" is used, which makes it possible to recognize this crime as over at the moment when the property is turned in favor of the guilty person, and he has a real opportunity to dispose of it. 

Summing up, it should be noted that in criminal law science, the structure of special fraud compounds is criticized ^[5]. With regard to the composition of the crime under consideration, it is rightly noted that the disposition of the new version of Part 1 of Article 159.3 of the Criminal Code of the Russian Federation does not contain deception to indicate the addressee, does not indicate the source of origin of the electronic payment means. Having established the qualifying signs traditional for fraud in Article 159.3 of the Criminal Code of the Russian Federation, the legislator did not take into account the specifics of committing this type of theft and did not provide parameters characteristic exclusively for this form of socially dangerous behavior. Agreeing with this, we point out that its provisions need to be improved.

Currently, the criminal legislation of the Russian Federation and the People's Republic of China has an identical approach to the definition of fraud, according to which there are general and special norms that reflect the specifics of committing this crime in relation to various types of public relations arising, including in the field of high technology, the financial sector and the use of electronic means of payment. In the criminal legislation of the Russian Federation and the People's Republic of China, there is an insufficiently clear consolidation of the composition of fraud using electronic money, which does not allow it to be clearly distinguished from other types of theft, and the description of qualifying features according to a typical mechanism for all theft contributed to the "dropout" from the attention of the legislator and law enforcement officer of the list of circumstances that significantly increase the nature and degree of public the dangers of the deed.

In order to overcome the identified gap, it seems necessary to clarify the design of the composition in question, reflecting in Article 159.3 of the Criminal Code of the Russian Federation such features as:

- commission using customer databases or databases containing information about persons who own bank cards or other electronic means of payment;

- commission using the resources of the information and telecommunication network "Internet";

- unauthorized access to mobile applications and other content that allows making non-cash payments without a confirmation procedure.

The proposed changes will allow creating a detailed legal toolkit that is accessible to the perception of the law enforcement officer and specifying the content of the criminal law prohibition.