China cracks down on fake DeepSeek and ChatGPT services amid AI fraud surge

AI chatbots

• China fined firms for impersonating AI platforms like ChatGPT and DeepSeek
• SAMR aims to deter fraud and standardise AI sector with stricter enforcement
• New anti-monopoly guidelines proposed to address algorithm-driven market abuses

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China’s State Administration for Market Regulation (SAMR) has penalised several companies for masquerading as well-known AI platforms, including DeepSeek and OpenAI’s ChatGPT, in a fresh crackdown on unfair competition and consumer fraud in the rapidly expanding artificial intelligence sector.

According to a report by South Morning China Post, in one of the most prominent cases, SAMR fined Shanghai Shangyun Internet Technology Rs 62,692.70 yuan for operating a fraudulent ChatGPT service on Tencent’s WeChat super app. According to the regulator, the company falsely claimed to be offering an official Chinese version of OpenAI’s chatbot and misled users into paying for AI-powered conversations. The watchdog said the activity violated China’s Anti-Unfair Competition Law.

“The company was fully aware of the industry status and influence of OpenAI’s ChatGPT,” SAMR said in its statement. “It deliberately created a false impression that it was providing the official service to mislead users into making purchases.”

In a separate case, Hangzhou Boheng Culture Media was fined Rs 30,000 yuan for running an unauthorised website advertising “DeepSeek local deployment” services. The regulator found that the website closely mimicked DeepSeek’s official platform, using near-identical fonts, icons and page layouts to deceive users into paying for a fake service.

SAMR noted that a surge in knock-off DeepSeek mini-programmes and websites appeared in early 2025, alongside widespread issues such as brand confusion, trademark infringement and false advertising. The regulator said these enforcement actions were intended to deter illegal operators and steer the AI market towards a more standardised and orderly development path.

The two cases were included among five “typical” examples disclosed by SAMR on Friday, highlighting the scale of misconduct emerging alongside China’s booming AI industry. Artificial intelligence tools have seen rapid adoption and deep integration across sectors such as finance, e-commerce, marketing and customer service, increasing both innovation and regulatory challenges.

Beyond impersonation and consumer fraud, SAMR also revealed penalties in other AI-related cases. An engineer was fined Rs 360,000 yuan for illegally accessing company servers containing confidential code and algorithm data. A Shanghai-based company was fined Rs 200,000 yuan for developing AI-powered phone call software used by loan agencies to carry out scams. Meanwhile, a Beijing firm was penalised Rs 5,000 yuan for “freeriding” on the DeepSeek brand name in its own local deployment software.

Alongside enforcement, SAMR is refining its regulatory framework for the AI era. The watchdog has proposed new anti-monopoly guidelines aimed at addressing risks such as algorithm-driven price manipulation on online shopping, food delivery and travel platforms. These measures underline Beijing’s intent to rein in abuses while allowing the AI sector to continue growing under stricter governance.