Chinese online retailers are facing a new wave of refund fraud as some customers use artificial intelligence (AI) tools to create fake images showing damaged or defective products. According to the South China Morning Post, buyers first photograph genuine items and then edit them with AI to appear spoiled, broken, or rusted before requesting refunds. Sellers of fruits, electric toothbrushes, clothing, and ceramics have reported such incidents, with AI-detection tools confirming manipulated images in some cases. The scams have raised ethical and legal concerns, especially during the Double Eleven shopping festival. In response, major e-commerce platforms like Alibaba’s Taobao and Tmall have removed the 'refund only' option and introduced a buyer credit scoring system based on purchase and refund behavior. Additionally, China has mandated that all AI-generated content must include visible and invisible watermarks from September 1 to curb misinformation and fraud.