But the other poster only claimed that this was fraud because it abuses a loophole. So where is the line between a loophole being legal versus being fraud? Or, what is it that makes this fraud besides being a loophole?
Using fake/other identities is squarely in the realm of fraud, not loopholes, if that is what happened.
Edit: The article details that part of the strategy employed was to attempt to get a refund for any flight that ended up not being delayed, which would probably qualify as fraudulent intent (I think? IANAL).
I'm not sure what the exact rule that was abused was, as I'm not familiar with Chinese law. I know that rule of law in China is not as strong as in many other countries, but I'm supposing that for small time stuff like this it's not too bad. I'm presuming that there is some element of the contract that she misrepresented herself on, such as an intent to travel clause or something of that nature. It may not be the case, but that would be an example of a legal theory under which her behavior would be fraudulent. The source article claims that she "... had repeatedly forged materials such as flight delay certificates, fabricated fictitious flight delays, ..." (Google translate output).
If she lived in a western democracy and had a limitless legal team she would unlikely be in any sor tof trouble as well. The tax system does a terrible job going after the Apples but a very good job getting it's way with small business owners.
Free Advice: if you run afoul of the tax system, pay first and challenge later. You're likley to lose and the punative penalties can bury you.
Legally speaking there is a big difference between technical fraud (using fake identities etc) and so called tax loopholes, because those often refer to clever tax avoidance. Tax evasion is illegal obviously. But the usage of tax avoidance is often even required because companies would otherwise be liable in relationship to their shareholders.
Edit: Reading your comment again, maybe my statement was already implied.
The reason it’s fraud is because you’re buying plane tickets and insurance to make money rather than actually travel. The loophole itself isn’t fraud. It’s also fraud to purchase a lot of things, with the intention of returning them after you use it.