Shanghai police are investigating 26 criminal gangs involved in antique scams as part of a citywide crackdown, city officials told Shanghai Daily on Thursday.
More than 450 suspects were picked up in the sweep and 370 have been detained for allegedly participating in the scam, which officials say involved more than 50 million yuan ($7.7 million).
The investigation began in January after police received multiple reports at the end of the previous year.
According to police, the companies involved typically register as auction houses or art galleries and open up shops and offices in the city's high-end commercial buildings. They then set up scams that charge victims large amounts of money for appraisal and service fees.
"The victims, who think they have precious antiques, are usually attracted by the companies' fake auction or exhibition online," a police officer, Wei Tao, told Shanghai Daily.
"Any completely worthless artifact will be appraised as worth millions of yuan," he added.
Wei said whenever the victim comes to the shop, a person claiming to be an appraiser tells them that the item is a genuine antique and charges a 600-yuan fee.
However, in order to complete the sale to a fake buyer, the victim is instructed to send their "precious antiques" to a third-party institution for a "professional appraisal" worth 10,000 yuan.
The appraisal never meets the requirements of the fake buyer, resulting in the cancellation of the transaction and the victim losing their money.
Officials said there are 99 companies operating in Shanghai that fit the profile of the scam.
"There's a lack of regulation in the industry, which makes supervision difficult," Wei said.
Shanghai police have previously arrested 17 people in January for swindling more than 100 people of 6 million yuan ($913,806) via a fake auction house in Hongkou District. The modus operandi involved luring sellers with promises of clients willing to buy their antiques in exchange for high appraisal fees.