To begin with, an old event comes to mind. In 2004, Avnish Bajaj, who was the CEO of Baazee.Com, was accused and put in jail because ‘someone’ was trying to sell porn on his platform. Avnish had nothing to do with the case, as baazee.com was a market place with the management having least control on what was being traded. However, in the present scenario when ecommerce has evolved into Online Retail, and management practically controlling everything that sells, do the CEO’s & Director’s understand the liability they carry on their heads.
Now, it’s no more hidden what eCommerce companies are doing to meet their ‘projections’ that were presented at the time of raising investments. Right from selling ‘blackCherry‘ to selling ‘Black’ Blackberry, they are working on all possible strategies to give the consumer only one thing…BEST POSSIBLE DISCOUNT without any concern.
Just a few months back, Jai Anand, a 2nd year law student, highlighted the whole blackberry episode on deals and you on one blog and similar on alok kejriwal’s iconic blog www.therodinhoods.com, where they were selling defective / refurbished phones. At times, these devices did not have their IMEI number registered with Indian Customs. While it may appear to be a small concern, it is a big threat to our national security and comes under the National Security Act (NSA) and is a serious violation of law, as highlighted below.
Extract from a Post by Neeraj Aarora
“Taking serious note of the situation pertaining to the circulation of mobile phones without IMEI number and its potential threat for the national security in view of recent Mumbai Terror attacks, the Department of Telecommunication, Government of India, vide its Letter No. 20-40/2006-BS-III (Pt.) (Vol. I)/201, dt. 3rd September, 2009 has directed all the Cellular Mobile Service Providers that calls from the mobile handsets with any IMEI number which is not available in the latest updated IMEI database of GSMA[v] along with without IMEI or all zeros as IMEI are also not processed and rejected with effect from 24 hrs of 30th November, 2009.”
“The Crime Branch of Delhi Police on the complaint of the Indian Cellular Association have conducted raid on December 9, 2009 at the Karol Bagh Electronics market and arrested 23 mobile vendors who were found selling banned Chinese mobile phones. The police have seized from them a total of 3,500 mobile handsets without the IMEI numbers. A “Spiderman Software Box” which was imported from China to upload fake IMEI number on handsets has also been seized from these vendors. The implanting of fake IMEI numbers and selling it to innocent customers have very serious ramifications as far as the national security is concerned. Given the large number of banned Chinese mobiles in circulation, it could lead to large scale tampering/manipulation of IMEI numbers. Given the increasing role of cell phone transcripts in monitoring and investigating anti-social activities including high profile terror cases, usage of fake IMEI number could lead to failure of the very objective of the GII drive initiated by the Department of Telecommunications, Government of India.”
In the 2004 event the CEO was unaware about products being sold on his platform, however today, with the growth and evolution of ‘eCommerce’ the top management is well aware as clearly reflected by email conversations below between the CEO and the Head of Quality and Head of Sourcing of Fashionandyou.com, in which Pearl Uppal, CEO of Fashion&You was concerned about increasing customer complaints and noise over wrong phones they were selling.
While selling such products, these sites use a statement “All the phones are legally imported by the vendor and it may carry operator logos” and in a research by Jai Anand, he clearly mentioned the following.
“No operator (including AT&T) allows unlocking of the phones through them before completing three months of active service. Thus, it now becomes impossible for these phones to be unlocked by the company as these are new phones (as mentioned by the e-commerce company). Hence the only case is that this is third party unlocking. Or the phones are used phones and being sold as new.”
Are these phones really being legally imported? Does Blackberry India know that locked phones from the U.S. are being sold in India? Do the American carriers know of this practice? Without these questions being answered, it is the customer that ultimately stands to lose and it clearly implies that in this chase of top line, false projections, and higher valuations in next round, these companies are taking away customer happiness and at times impacting sensitive areas such as national security.
In the true spirit of entrepreneurship one would like to assume, all these could be an act of immaturity and incompetency of people to understand risks involved. However how long should the industry and customers suffer? Despite these issues being raised and talked internally as well as on reputed blogs and websites, the top line focused online companies continue to sell these unauthorized products procured from various grey channels, probably via multiple small units owned by these ecommerce companies themselves.
Clearly these practices adopted by a few ecommerce companies become a black spot in the real growth story of Indian eCommerce. Also to our surprise, the VC’s overlook these issues in their due diligence process during pre-investment or do not create sufficient pressure on these companies to correct their act.
And the big questions remains, who will be jailed now for such acts, the CEOs, ‘Star Entrepreneurs’, Companies that are supporting these organizations, or VC’s who capital is being deployed in such acts.
Iamwire is proud to take a stand in favor of true entrepreneurship and safeguarding Venture investments, providing them neutral and analytical perspectives in Indian Online Industry. We do welcome inputs, suggestions and comments from the industry and would also ask whistle-blowers to highlight issues of corporate governance and other malpractices within the industry. Our endeavor is to promote honest entrepreneurship – and bring the wrath of peer pressure on malpractice. In case you want to highlight some issues please drop a mail at firstname.lastname@example.org, anonymity will be maintained.
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