Hong Kong police have arrested 27 people in a crackdown on a fraud syndicate suspected of swindling 58 residents out of HK$1.6 million (US$204,800) worth of luxury goods by using bad cheques.

The force on Thursday said that, in addition to deceiving victims into handing over the products, fraudsters also claimed to have mistakenly transferred excess funds into the sellers’ bank accounts and demanded to be paid back the difference.

Chief Inspector Chan Ka-ying of the New Territories South regional crime unit said that in each case the difference was usually thousands of dollars, resulting in additional losses for the victims, on top of discovering the scammers’ cheques had bounced.

The suspects, detained in raids on Tuesday and Wednesday, included two alleged syndicate ringleaders and other members such as those holding bank accounts suspected to have been used in the fraud, she said.

The 24 men and three women, aged between 16 and 72, were detained on suspicion of conspiracy to defraud – an offence punishable by up to 14 years in jail.

According to police, members of the syndicate posed as interested buyers and contacted the sellers on online shopping platforms to express interest in purchasing products such as handbags and watches. After reaching a deal online, face-to-face transactions were arranged.

Swindlers deposited non-cashable cheques through automated teller machines to create the impression that the money had been transferred.

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During the transactions, the suspects presented the deposit receipts to the sellers, who found the corresponding amount attributed to their account balance and handed over the items.

Police warned that the account balance showing the added funds did not mean the transaction was successful, with only the available balance showing the true credit status.

“We also discovered that the fraudsters falsely claimed that they had mistakenly transferred an excess amount and demanded the victims refund the difference, leading to a second loss for the victims,” Chan said.

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The chief inspector said 58 Hongkongers fell prey to the scam between July and November.

The victims only realised it was a scam when the cheques bounced.

Police said the investigation was still under way and further arrests were possible.

The force recorded a 52.5 per cent increase in all types of deception cases, with 29,650 reported in the first nine months of the year compared with 19,440 over the same period in 2022.

Victims lost HK$4.99 billion between January and September this year, an increase of 47.6 per cent from the HK$3.38 billion recorded in the same period in 2022.