Staff, sellers colluded in cashback fraud worth at least 10 Crores| Paytm’s internal investigation underway.
The cashback fraud at Paytm’s e-commerce marketplace arm, Paytm Mall involved hundreds of sellers and tens of employees who colluded to the tune of almost ₹10 crore.
“We found out that there were some sellers who were colluding with some employees at the junior level and they sort of got more cashbacks on their products, so we blocked those sellers and fired those employees, said Vijay Sekhar Sharma, Founder, Paytm.
Paytm is acting against hundreds of sellers and tens of staff involved in fraud to the tune of around ₹10 crore.
Sharma plans to make Paytm mall seller registration process more stringent to curb such frauds in future.
The fraud reportedly involved fake transactions between merchants and employees resulting in unfair gains from cashback.
The exact amount of the fraud is touted to be in the vicinity of ₹ 10 Crore, Sharma mentioned at a press conference.
The company has appointed consulting and audit company EY to investigate the cashback fraud.
The investigation is ongoing since a at least a fortnight. Internally, Paytm has already dealt with a few employees, as per a report by news agency PTI. Paytm is also planning to make the seller registration process for the Mall much more stringent. Sharma said:
“We first used to believe that every seller should be able to sell on Paytm Mall. Right now we are stringently clear that only authorized brand sellers will be allowed,”
Paytm currently enlists 12 million merchants, and over 300 million customers on the Paytm Mall platform. The unicorn has been extensively exhausting cash to acquire new merchants and customers.
The platform is in the process of de-listing fraudulent merchants, but will not revoke cashback offers.
Fraud adds to Paytm Mall’s struggle in the saturated e-commerce segment
The timing of the fraud in itself adds stress to the company which is struggling to match up to the bigger players Amazon and Walmart-Flipkart.
Paytm Mall reported losses of ₹1,787.55 crore on a total revenue of ₹774.86 crore in 2017-18, as per regulatory filings.
As per an ET report in April, Paytm’s largest investor Alibaba was experiencing growing inhibition in infusing more money to back the cashback-based e-commerce model. Alibaba group arm Ant Financial holds a 42% stake in Paytm Mall.