China’s market regulator disclosed yesterday the penalty of fines of 2 million yuan ($300,000) each for Luckin Coffee and four other associated companies for their 123 million fake orders fabricated through fake transactions, fake bank statements and other illegal measures.
The State Administration for Market Regulation showed in its written decision that in April through December 2019, Luckin Coffee, with the assistance of third-party companies, faked its revenue, cost, profit and other key marketing statistics in order to create misleading achievements to appeal to consumers and build competitive advantages.
The company also created fake transactions, procurement, deliveries and fake advertising costs with third-party firms to inflate its expenditures to balance the fraudulent profit thus creating a boosted revenue. These fake marketing records and deceptive actions were largely promoted through numerous press conferences and public events, and on Luckin Coffee’s website and social media accounts.
Luckin Coffee’s fabricated data found by the state’s inspection include transactions worth 2.25 billion yuan, 2.1 billion yuan in revenue, 1.2 billion yuan in costs and profit of 900 million yuan.