Uber drivers are using hacked smartphones and members of private forums known as 'nurses' to trick the company into paying them for journeys with fictional passengers.

Some drivers are able to boost their pay by using a phone which can operate several numbers to trick Uber's system into thinking they are picking up fare-paying passengers. Some drivers also work with scammers on private forums to earn profits from bogus journeys.

The practices are hampering Uber's $1 billion (£640 million, €895) expansion into China, where it is hoping to take on local market leader Didi Kuaidi, which controls 78% of the market compared to Uber's 11% – even that small share means one million rides per day for Uber.

But that number, cited by Uber in a recent letter to shareholders, is "definitely exaggerated," analyst Zhang Xu told Bloomberg. Uber drivers speaking to the news website explained two ways in which they can be paid for journeys made with no passengers in their car. One is to buy a modified smartphone which can operate with several phone numbers – and therefore several Uber passenger accounts – at once.

Earning money from an empty car

Drivers use one number to act as a rider, request a lift, then accept it from their driver account. Being a new customer, the modified phone's number will be given some free Uber credit – but when passengers use free credit for a ride, the driver is still paid by Uber itself for completing the journey. Say the driver has a genuine fare waiting for him at the local airport, he could use this technique to get paid for the drive there, covering his petrol and earning him money while the car is empty.

Hacked phones capable of managing several numbers at once can be bought online from China's Taobao, an online marketplace run by the internet service group Alibaba. A search for 'Uber' brings up a modified iPhone 5c priced at around £260.

A second technique involves drivers teaming up with fraudsters on private, invitation-only forums. Drivers, referred to as patients, ask bookers, known as nurses, to request them for a fake journey – called an 'injection'. The driver heads to the location selected remotely by the nurse, then confirms through their driver app that the journey was made; it is then paid for by the booker, who receives a small fee – around $1.60, according to Bloomberg. The money they spent on the fake fare is then reimbursed by the driver, who keeps his payment from Uber (which is greater than the amount refunded to the booker), along with a driver bonus issued by Uber.

Uber's Beijing-based spokeswoman Huang Xue said in a statement: "Uber takes fraud very seriously, and deactivate drivers/users permanently once caught," adding that the company has various tools to detect fraud, used by a dedicated team who constantly monitor the actions of drivers and passengers.