Another Arrest at Fangcun for Tea Fraud: Four Scams in the Tea World — Run When You See Them

In mid-August, another person was arrested on suspicion of fraud at Guangzhou's Fangcun Tea Market. (Source: Sohu @Pai'an Yanfa Criminal Defense Lawyers, August 15, 2026)

Fangcun is the largest tea trading market in the country. Plenty of people there do legitimate tea business, but there are also plenty of people eyeing others' wallets. Over the years the scams have kept evolving, but they all fall into four patterns — the first three are concentrated in Fangcun, while the last wears a "direct selling" disguise and preys mainly on ordinary people, the elderly, and people within one's own social circle. Today we'll take them apart one by one. If you encounter any of them, don't hesitate — walk away.

Scam One: Financial Tea — From "Delivery Slips" to "Empty Orders," the Tea May Be Just a Piece of Paper

This is Fangcun's most classic and most damaging scheme. In August 2024, Fan Cha Holdings collapsed, involving over 10 billion yuan and affecting more than 500 dealer stores. Its founder, surnamed Zheng, was born in the 1980s; the company was only founded in 2022, yet within two years it had hyped a single pu'er cake to over 100,000 yuan. (Sources: Beijing News, August 8, 2024; Securities Times, August 7, 2024)

The financial tea playbook isn't complicated, but it builds in layers:

Step one: select a pu'er product with controllable output and lock up the supply. Step two: through self-dealing and planted "shills" in trading groups repeatedly raising prices by a few hundred yuan, create the illusion that "it goes up every day." Step three: use "limited-time buybacks" and "guaranteed returns" to lure retail investors in — Fan Cha promised to buy back at 120% of principal or higher after one month, with monthly returns at one point exceeding 15%. Step four: once enough money has entered, the market maker dumps inventory or the chain breaks and they vanish.

But more insidious than the "high-price buyback" itself is the bait-and-switch at the delivery stage.

According to reports from Beijing News and Securities Times, Fan Cha's trades initially involved physical tea delivery, then became a "pickup code" proving ownership; by the peak of the mania in 2024, even the pickup codes disappeared — retail investors simply transferred money, and when the term ended, the dealer automatically returned principal plus premium. In this four-party closed loop of company, dealer, investor, and platform, money went around in a circle while the tea never moved at all; the funds ultimately returned to company accounts.

Even more outrageous were the "private pools": investors placed orders through dealers who never ordered from the company at all and simply pocketed the money. There were also "ticket scalpers" operating outside the system — anyone could "sell tickets" in the name of selling tea, and the quantity sold far exceeded what physically existed in warehouses.

Fan Cha didn't invent this. Back in 2021, Dayi Tea's "Cangjie Hao" suffered a similar crisis: the official allocation price was 70,000 yuan per tong (a bundle of seven cakes), while the market hyped it to 150,000–200,000 yuan, but the "empty orders" written by sellers were reportedly a hundred times the actual spot goods. On delivery day, sellers had no tea to deliver; platforms collectively defaulted, with some losses exceeding 20 million yuan. This kind of "futures trading" was disguised with warehouse receipts and delivery notes, with no regulated exchange oversight — you held a "warehouse receipt," but the tea might not exist in the warehouse at all, and the documents didn't match actual inventory. (Sources: National Business Daily, Southern Weekly)

Changshi Cha in 2023 followed the same script: a post-2000 founder, surnamed Chen, made off with over 500 million yuan in half a year; tea prices crashed from over 50,000 yuan per tong to two or three thousand. Earlier cases like Cha You Yi, and a 2025 Fangcun financial tea case where three people were sentenced for illegal absorption of public deposits involving 180 million yuan, were all the same playbook. (Sources: Economic Observer, National Business Daily, V&T Law Firm announcement, April 2025)

It should be noted that figures like Fan Cha's "over 10 billion yuan" and Changshi Cha's "over 500 million yuan" all come from media reports; final figures are subject to judicial determination.

How to tell? Remember one thing: tea is for drinking, not a wealth management product. Anyone who tells you "buy this tea, guaranteed to appreciate" or "we'll buy it back at term" — no matter how legitimate the warehouse and contract look — is essentially pulling you into a pass-the-parcel game. The simplest test: take your "delivery slip" to the warehouse — can you actually take delivery? If you can't, it's just a piece of paper. To learn more about how to judge tea purchases, see our pu'er buying guide to avoid pitfalls.

Scam Two: Loan Fraud — The Tea Shop Is a Prop, the "Property Collateral" May Be a Bad Check

In June 2024, a man surnamed Tang opened a tea shop in Fangcun. He frequently invited people for tea, gave out tea samples during festivals, and spent freely — quickly building a "reputation" in the neighborhood.

Then, citing a need for working capital in the tea business and claiming he owned property in a residential development in Guangzhou's Haizhu District as collateral, he borrowed from multiple people amounts ranging from 300,000 to 1 million yuan. Every contract specified interest, repayment terms, and mortgage clauses, looking perfectly standard.

According to an investigative report published July 30, 2026, by the NetEase account "Urban Investigation Notebook," when the loans came due Tang disappeared, with lenders' cumulative losses around 2.4 million yuan. The report also claimed that the "collateral property" had already been mortgaged to a bank for a 8.6 million yuan loan during the borrowing period; the "mortgage clauses" in the contracts were never registered; and the borrowed funds were transferred to multiple personal accounts and used to borrow new to repay old.

But this must be made clear: As of August 20, 2026, on public channels such as China Judgments Online and the People's Court Announcement Network, no civil or criminal judgments can be found involving this tea shop or Tang as a party; the Guangzhou police and procuratorate websites also show no public filing notices or indictments. Business registration records confirm the tea shop entity exists (Liwan District, Guangzhou; operator Tang; sole proprietorship), but the details — the 2.4 million in loans, the 8.6 million mortgage, the timing of disappearance — currently appear only in a self-media investigation and have not been confirmed by judicial documents.

In other words, this is "media-investigation-level" fact, not "judicially-confirmed-level" fact. But that doesn't diminish its warning value — the mechanics of this scam are real:

• Using a physical tea shop to build trust, then "property collateral" to create a sense of security
• Contracts say "mortgage" but no registration is filed — under the law, a real estate mortgage is established only upon registration; without registration, it's as if there's no mortgage at all
• After large sums arrive, funds are quickly moved to personal accounts rather than used for the tea business

A physical store doesn't equal honest business, and a contract that says "mortgage" doesn't mean a mortgage was registered. If someone approaches you to borrow money, the first thing to do isn't admiring how pretty the contract looks — it's making an appointment to go together to the real estate registration center for a records check. Whose name is the property under? Is there a mortgage? Is there a seizure? One search tells you everything. Bring your ID, fill out a real estate registration records inquiry form; the fee is about 30 yuan per search. Verbal assurances that "the property isn't going anywhere" have no legal force whatsoever.

If you've already lent money and the other party has disappeared, rights protection proceeds in two steps:

Step one: file a police report. Take the IOU, transfer records, and communication recordings (including evidence of the other party proactively showing property documents and promising repayment) to the economic crimes unit of the police branch where the business is located or where the defendant resides; ask for a case acceptance receipt. The more complete the evidence, the more likely police will accept it as a "loan fraud" case.

Step two: if police determine it's a civil dispute and decline to file, you can bring a civil lawsuit with the IOU and transfer records, demanding repayment. Note that the statute of limitations is three years from the date the agreed repayment period expires; beyond that, the defendant can raise a defense. Once a civil judgment takes effect, you can apply for compulsory enforcement to investigate and seize the defendant's property, vehicles, and bank accounts.

Scam Three: Tea-Based Money Laundering — The "Big Client" Who Wires Money Without Asking About Quality

On March 18, 2026, CCTV reported a case: a Beijing resident, Ms. Sang, was induced to participate in a fake investment scheme. Rather than having her transfer money directly, the scammers told her to buy high-end tea and ship it to designated locations.

Ms. Sang was first lured by a scammer posing as a "tenant" to log into a fake gold futures platform; after seeing "returns" in her account, she kept adding investment. Then the other side made a strange request: buy well-known brands of high-end tea as "capital contribution" and ship it to a designated address to complete the investment. First 468,000 yuan, then 300,000 yuan — over 700,000 yuan turned into premium tea shipped by express to a remote town in Guangdong. When she could no longer come up with money, she was immediately blocked.

Beijing police found that at just the company where Ms. Sang bought tea, three suspicious accounts were identified; two other people had also spent over a million yuan each buying tea as "capital contributions," all lost. The Beijing Anti-Fraud Center issued an urgent alert that same day: buying high-end tea has become a new method for scammers to transfer illicit funds, following gold, electronics, and gift cards. (Source: CCTV, March 18, 2026)

The mechanics are simple: fraud proceeds enter a tea merchant's account under the guise of "buying tea"; the merchant takes a cut and ships the tea to the designated address; the tea is then resold for cash. One buy, one ship, one sell — dirty money is washed into "legitimate tea trade income." High-end tea cakes can be worth tens of thousands of yuan each, with high collectible value and good liquidity — exactly meeting scammers' needs for "expensive, easy to liquidate, easy to mail."

These "clients" have several telltale signs:

• Don't ask about origin, don't ask about processing, don't request a tasting — they go straight to buying large quantities at high prices
• Insist on shipping to remote addresses clearly inconsistent with the buyer's location
• Rush for delivery and refuse to use legitimate trading platforms
• Transaction rationale is abnormal — e.g., "investment capital contribution," "receiving on someone's behalf"

Genuine tea buyers ask about mountain, tree age, and taste; they request samples and haggle over tens of yuan. There's only one kind of "client" who wires money without asking anything — because what they're buying was never tea.

Scam Four: Pyramid Selling of Tea — Pay 28,000 Yuan, Then Go Recruit People

The first three scams all happen in Fangcun. This last one is closer to ordinary people and more harmful — it doesn't target investors; it targets acquaintances, the elderly, and ordinary people hoping to earn some extra money.

According to a Kunming tea professional, a colleague known as Ms. Tao was invited by an acquaintance in 2024 to "drink tea." The other party claimed Anhua dark tea could lower the "three highs" (blood pressure, blood sugar, cholesterol), aid weight loss, and even regulate women's menstruation — no tea has the ability to regulate menstruation; this was purely false advertising. But she was persuaded at the time and paid 28,000 yuan for 50 jin (25 kg) of dark tea. After payment, the tea wasn't delivered; they claimed they would "store it for you for a year — aged tea tastes better and works better."

Then came the recruiting. They promised that recruiting three friends would recoup her investment and earn her over 79,900 yuan — "you can buy a villa in half a year." Not taking delivery meant they'd buy back at original price; after recruiting three downlines, she'd receive 7,500 yuan per month. Ms. Tao recruited one friend, who after receiving the tea found it harsh-tasting with lots of broken bits — nowhere near worth the price.

None of the promises were honored. Downlines requesting refunds or returns were flatly refused; the original-price buyback and the 7,500-yuan monthly returns all came to nothing. Ms. Tao realized it was a scam that same year, but two years later the 28,000 yuan still hasn't been recovered. More alarmingly, according to the account, her upline's upline remains active in the northern part of Kunming, continuing to recruit new downlines; after the company came under investigation, these people continued scamming on the grounds that "the company and individuals are separate." Someone who attended a recruitment seminar revealed that the person explaining the compensation plan claimed to be a teacher at a Shanghai university but repeatedly miscalculated amounts when explaining the formulas.

This isn't an isolated case. In February 2026, a journalist went undercover for over two months and exposed the dark tea marketing model of Li Xiang Hua Lai (Ideal Hualai). To join, you first had to pay a lump sum of 28,000 yuan for tea in exchange for so-called "agency rights" — a sum far exceeding the tea's actual value, essentially an entry fee. Once inside, income didn't come from selling tea but from recruiting: bringing in two new people who each bought a package earned you 8,000 yuan and a promotion from the "consumption group" to the "sales group"; agents were ranked from one star to five, with commissions of 3%–11% per new recruit depending on rank, and uplines could continue earning commissions as downlines recruited more, forming a multi-level compensation pyramid. (Sources: Elephant News, Zhengguan News, March 17, 2026)

The promotional tactics were highly consistent. According to participants, they were taken to closed campuses for "training"; some had their IDs confiscated and phone signals blocked; organizers used emotional manipulation and fatigue tactics, repeatedly drilling in the get-rich-quick myth of "low investment, high returns." To the outside world, they claimed dark tea could cure all ailments — lowering the three highs, losing weight, regulating menstruation — while the actual tea delivered was poor quality with broken leaves. Online, large numbers of paid posters posted positive reviews; when unsuspecting middle-aged and elderly people searched and saw roughly half positive and half negative reviews, like online shopping they took a "middle ground" and figured "some people say it's good, might as well try." People's Daily commentary pointedly asked: Are they using tea sales as a front for recruiting? Are they using a "legitimate front desk, illegal back office" scheme to separate liability? A direct-selling license cannot be a shield for illegal activity.

Here's a key detail: Li Xiang Hua Lai did receive a direct-selling license from the Ministry of Commerce in 2013 (No. 44), but its registered products were only 31 cosmetics and cleaning products (toothpaste, shampoo, and other personal care items) — it did not include Anhua dark tea or any tea product at all. Selling tea through a direct-selling model under a direct-selling license constitutes operating beyond the licensed scope. (Sources: Tianyancha News, Ministry of Commerce Direct Selling Industry Management Information System)

The official developments so far are:

• In December 2025, the government website of Fengxiang District, Baoji, Shaanxi, issued a risk alert stating that a local agency, under the guise of recommending tea purchases, offered "a 1,000-yuan commission for every 8 people buying 7,000-yuan dark tea packages, and 100,000 yuan for every 4 people buying 28,000-yuan black tea packages." After the district's anti-illegal-financing office organized police and market regulators to inspect, the agency was preliminarily determined to be suspected of illegal fundraising or illegal pyramid selling.
• On February 12, 2026, the government of Anhua County, Hunan, issued a briefing stating it had coordinated multiple departments to form a joint task force to launch an investigation, and ordered the company involved to suspend team receptions and meeting/training activities during the investigation. (Sources: Fengxiang District Government website, December 16, 2025; Anhua County Government briefing, February 12, 2026)

It should be noted that, as of now, the investigation at Li Xiang Hua Lai's parent-company level is still ongoing with no final judicial characterization; relevant amounts should be subject to official investigation and judicial determination. However, at the dealer and local team levels, there have already been multiple effective criminal judgments: in 2013, the Wugang City People's Court in Hunan ((2014) Wu Fa Xing Chu Zi No. 166) sentenced two responsible persons to two years' imprisonment for organizing and leading pyramid selling; in 2019, the Changting County People's Court in Fujian issued a first-instance public judgment in the case of Lin Mouxiang and 14 others for organizing and leading pyramid selling, with the principal sentenced to three years and a 200,000-yuan fine. What these judgments all found was the same model: "buying tea to obtain membership, organized in sequential levels, with compensation based on the number of people recruited." (Sources: The Paper reprinting Changting Court bulletin, China Judgments Online)

This scam is the easiest to recognize: if you're asked to pay a large sum upfront to "join," if income comes mainly from "recruiting" rather than selling tea, if you earn layered commissions from the people your recruits bring in — any one of the three is pyramid selling, and it has nothing to do with whether the tea is any good. If you've already put money in, take your transfer records, chat records, and promotional materials to the local police economic crimes unit to file a report, and simultaneously call 12315 to report to market regulators — don't wait just because "the company is still under investigation"; individual pyramid selling conduct can also be held accountable.

Four Iron Rules to Keep You Out of Trouble

After years in the tea business, I've boiled it down to four simplest rules of thumb:

First, don't touch any tea that promises returns. Tea has no fixed rate of return; things with fixed rates of return are wealth management products, and wealth management products require a financial license. Even Dayi's "Cangjie Hao" blew up because empty orders far exceeded spot goods — let alone "financial tea" with no spot goods at all. As the casino owner once said, no one can beat the house. Instead of dreaming of getting rich from tea, you're better off honestly picking a few reliable daily drinkers — what you drink is what's actually yours.

Second, don't lend money without verifying collateral. It takes only a few minutes to go with the other party to the real estate registration center for a records check. A contract that says "mortgage" without registration means no mortgage was established — same as no collateral at all.

Third, be wary of "clients" who buy high-priced tea without asking about quality. People who actually drink tea are picky about tea; money launderers only care about price. When faced with a "big order" that doesn't ask for a tasting, doesn't haggle, and only rushes delivery, keep your guard up and verify with police if necessary.

Fourth, if a tea deal wants you to pay to join and then earn by recruiting people, turn around and walk. Entry fees, headhunting, and multi-level compensation are the three elements of pyramid selling expressly defined in the Regulation on Prohibiting Pyramid Selling — it has nothing to do with whether there's a direct-selling license or whether the tea is drinkable.

Banners warning against high-interest investment management hang at the entrance to Fangcun Market, but there are always people who think "this time is different." Truth be told, every time is the same.

Tea is simple: if it tastes good, buy it; when you finish it, buy more. Those who try to make fast money from it usually end up paying for the tea and paying tuition for the lesson.

Have you encountered suspicious schemes when buying tea? Share in the comments to help fellow tea lovers stay alert.

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