ya, they exist.
Same kinda thing happens on ebay. They will turn 2 gig into '200' gigs and sell them
I remember when I was in China I got a 16g flash drive (this was 7 years ago). At first it worked, and I was copying over pictures from my cousin's camera into it. Suddenly it told me it was out of space...So I checked how big the picture folder was... (Windows XP)
You know how on old computers, if a file is very large the size will visibly increase for a few seconds before settling on the total number? Well it did that...And kept doing it...
It told me the pictures folder was 200GB before I closed the window... It wouldn't let me reformat or delete anything or copy or move anything on the drive
Moral: be careful buying electronics from China even though they are all 1/8 regular prices
/unrelated