Chinese videogame developer Hoolai has dominated the Chinese App Store with its social game Three Kingdoms. China is Apple’s number two market (after the United States) and Three Kingdoms quickly jumped to the top of grossing charts in that market. Their revenue total from October 2011 totaled about $600,000. However, when Hoolai received that revenue from Apple, they only got about half of that amount, while the rest were discovered to be fraudulent purchases from Taobao, the Chinese equivalent of eBay.

Three Kingdoms reached the number five spot on the U.S. App Store charts a couple weeks ago, despite not being in English. On that day, Hoolai had supposedly earned about $65,000 in revenue globally. At that time, there were numerous one-star reviews posted about how the game was charging users for purchases they didn’t make.

What happened was that some people had been using falsified credit card numbers or stealing real ones from iTunes users in the US and UK and making in-app purchases, then using Taobao to sell these virtual products at a far-discounted rate. In this case, someone could buy cheap apps or virtual currency at a major discount (50 percent or more) and would receive iTunes login info that could connect them to a fake or stolen credit card number.


Once Apple came across that fraudulent activity, they stopped the transactions and Hoolai did not receive those portions of the payment, which totaled up to about $300,000 in October. On Hoolai’s end, they are unable to differentiate between legitimate and fraudulent purchases, and that was one of the main reasons for such a discrepancy between projection and reality in October.

[via Inside Mobile Apps]