Deconstruction of the Business Model:DiscountedHow Does Third-Party Repayment of Online Loans Operate? Why Does It Involve Criminal Risks?

Information about discounted online loan repayment is commonly found on second-hand trading platforms such as Xianyu. Searching for mobile top-ups or coupons on Xianyu often reveals such services, with descriptions like “JD Baitiao third-party repayment,” “90% to 75% discount on behalf payment,” “Starting from 90% discount for card/coupon repayment,” etc.

After initiating communication, sellers emphasize confirming receipt only after successful top-up, with a full refund if unsuccessful. Some sellers, to attract business, even guarantee compensation for interest if the repayment exceeds the deadline.

The actual operation is simple. Taking JD Baitiao as an example, the system itself supports features such as inviting friends to help repay or online third-party repayment via other bank cards. In Xiao Li’s case, he sent a link to the other party, who clicked to repay. Upon seeing the bill cleared, Xiao Li transferred the agreed discounted amount back to the seller or an account designated by the seller.

On the surface, this is clearly a loss-making deal for the seller. Moreover, the sellers do not further explain why they would offer such a service that involves subsidizing payments. If buyers do not carefully consider the upstream source of funds, they face significant criminal risks.

In the discounted third-party repayment model,the upstream source of funds often involves illegal risks or issues with abnormal origins. So, in the case discussed in this article, why did Mr. Li inadvertently become a tool for upstream telecom fraud gangs to launder money?

From Mr. Li’s perspective, the hundreds of thousands in loans were repaid by the Xianyu seller through a cheaper channel. He only needed to transfer 90% of the amount to the other party to save on costs. In reality, however, the money was not repaid by the seller. Instead, victims, following the instructions of the fraud gang, directly transferred the funds into Mr. Li’s Baitiao account.

For the fraud gang, Mr. Li’s Baitiao account was merely a “money laundering tool”: they used the victims’ money to repay Mr. Li’s Baitiao bill, thereby completing the circulation of illicit funds; Mr. Li then transferred “clean money” back to them as agreed. The difference constituted the cost incurred by the fraud gang to complete the money laundering. Thus, Mr. Li unknowingly became involved in the circulation chain of fraud proceeds.

Mr. Li might not understand: “I didn’t scam anyone’s money. Someone else helped me repay, and I paid them. How did this become a crime? I didn’t know they were scamming money, and their scams had nothing to do with me.”

However, the crime of concealing or disguising criminal proceeds does not require the party to participate in the upstream illegal act.The key lies in whether the party knew or should have known that the funds had illegal sources, yet still provided accounts, assisted in transferring, or exchanged the funds.

Comparing Xiao Li’s “discounted third-party repayment” with existing judicial precedents reveals that courts generally adopt a consistent approach in recognizing such repayment models.

In the “Dianfeng Third-Party Repayment” case [Case No.: (2021) Min 0583 Xing Chu 2003], Li Moumou bound seven credit cards under his name to an APP called “Dianfeng Third-Party Repayment for Profit.” Knowing that the upstream funds were criminal proceeds, he repeatedly accepted orders, topped up, and cashed out, extracting commissions.

The court emphasized in its judgment: Li Moumou, knowing that the upstream funds were criminal proceeds, still provided accounts and helped transfer illicit funds through third-party credit card repayment. His conduct met the constituent elements of the crime of concealing or disguising criminal proceeds. Evaluating his actions solely under the crime of aiding information network criminal activities (Bangxin Crime) was insufficient to fully reflect the social harm of his conduct. Therefore, he was ultimately convicted and sentenced for the crime of concealing or disguising criminal proceeds.

Furthermore, even if the amount involved is small, there remains a risk of being convicted of the crime of concealing or disguising criminal proceeds if the business model is abnormal.

In the “Small Advertisement Credit Card Third-Party Repayment” case [Case No.: (2023) Gan 0703 Xing Chu 109], Zhu Mou saw a small advertisement for third-party credit card repayment on the roadside. Knowing that the other party might use his bank card for illegal or criminal activities, he still handed over his bank card, mobile banking password, and verification codes for their operation. As a result, the card was used to receive funds in six telecom fraud cases, involving a total fraud amount of 9,491 yuan. The court held that he was not merely exploited but actively provided his account despite knowing the risks. Thus, even though the amount involved was small, he still constituted the crime of concealing or disguising criminal proceeds.

Based on Attorney Shao’s experience in handling cases, once such discounted third-party repayment cases are filed, defense strategies typically revolve around two core issues, depending on the specifics of each case:

First, the extent of the party’s awareness of the nature of the fund sources, i.e., whether there was “knowledge” or “should have known”; second, assuming the crime is established, how to control the determination of the amount involved and the evaluation of circumstances to strive for lenient treatment.

1. Arguing around “whether the party knew the fund sources were illegal” is the core of innocence defense in cases of concealing or disguising criminal proceeds.

According to Article 2 of the “Interpretation of the Supreme People’s Court and the Supreme People’s Procuratorate on Several Issues Concerning the Application of Law in Handling Criminal Cases of Concealing or Disguising Criminal Proceeds and Gains Therefrom,” “knowledge” includes both actual knowledge that the funds are illicit proceeds and inferred knowledge based on a comprehensive assessment of information contacted or received, funds handled, transaction methods, account abnormalities, professional experience, and relationships with upstream parties.

In cases similar to this one, judicial authorities typically focus on several questions: Whether the party participated in discounted third-party repayment operations multiple times; whether large repayments were frequently completed through strangers within a short period; whether there were abnormal transactions significantly below market prices; and whether basic verification of the fund sources was conducted. If these abnormal factors accumulate, they are often used to presume that the party “should have known.”

Therefore, the focus of the defense lies in combining the party’s background, transaction habits, and scope of information access to argue that, under general life experience, there was no reason to suspect illegal risks in the fund sources, thereby weakening the basis for the presumption of “should have known.”

2. The direction for leniency defense in cases of concealing or disguising criminal proceeds should focus on the determination of amounts and circumstances.

If the crime is established, the outcome of the case often depends on the determination of the amount involved.

In practice, investigative authorities usually retrieve all bank statements. However, the total turnover does not necessarily equal the amount of criminal proceeds. The account may contain mixed normal consumption, legitimate income, and other transactions, which must be distinguished item by item. Even if funds are involved in the case, it is necessary to further examine whether the party had the same subjective awareness for each transaction.

The judicial interpretation’s determination of “serious circumstances” is closely related to the amount involved and actual losses. If the amount handled by the party is directly equated to the victims’ losses, or if all turnover is included in the statistical scope, it may lead to a significant increase in the sentencing tier. The defense needs to strictly reduce the scope of the amount involved and, where conditions permit, facilitate restitution to lower the evaluation of social harm, thereby striving for substantial mitigation in sentencing.

Once investigated or indicted foractions such as 90% discount third-party repayment on Xianyu or third-party repayment of JD Baitiao, parties encountering such situations for the first time often feel anxious and confused. The key to such cases does not lie in “whether one participated in upstream acts,” but rather in the level of awareness regarding the source of funds and the manner of participation.Consulting a criminal lawyer early to assess the determination of knowledge and the amount involved is the first step in controlling risks.