Who is to be accused now?

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 editor@iamwire.com, anonymity will be maintained. 

We strongly believe Online Industry and eCommerce in India is growing and is here to stay.

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  • Jai Anand

    Excellent article by Iamwire team, and thanks for giving a mention.
    DNY and FNY are breaking laws openly and intentinally
    DNY and FNY are in great trouble, selling ‘refurbished’ phones labeling it as ‘new’ is illegal, importing used phones is ‘illegal’, giving a fake description intentionally is illegal.
    They knowingly indulge in these practices to increase their sales and to increase their high value transactions,
    FNY even sells grey market samsung phones, when they started FNY, no TIN no./VAT no. used to be mention on the invoice, some inside reasons for FNY but illegal.
    They even sell products market not legally imported without any hassles.

  • Akshay

    guys…though, i am also one of the customer of FNY but never had these experiences…

    I can see 3 articles one after the other in june only targetting only Smile and related companies till now. Isn’t this strange…or its planned..!!

    • vin

      it all depends on situation …if the order gets messed up its highly possible that company not waste time and money to resolve. it rather chose lose a customer…..and move on. you see it happening in regular local shops to in india …shop owners just don’t bother much to resolve your issue….

  • http://www.technicalbazaar.com Vishal

    this had been Done Way back by Me and Had Warned Them They had Even Given me the Payment of teh Blackberry back in CASH …And i used to get threatning calls from layers of deals and you as i had made a page on facebook ..You can Go Through my Story on this page
    https://www.facebook.com/dealsandu?ref=tn_tnmn

  • Anshai Goenka

    I think this article and the previous article on smile group is more than just journalism, I see some personal agenda been taken out, otherwise the article would have had mention of other such malpractice, how cum on 3rd June Iamwire is coming out with an article on smile group and yesterday another article totally on one of its venture. Reader’s please read between the lines, what I can sense a vested interest in creating a negative impression of an organisation.

    • MAV

      The bigger question is why isn’t anybody from the Smile Group denying this. Hats off to Iamwire for bringing such issues out in the open and for standing a stand against one of the larger players in the industry. Also, as the latest article says, such malpractices are being followed by a number of companies. They are highlighting the ones against whom they must be having some proof. Kudos to Iamwire!!! Great Work!!! We hope to hear more on this topic, and maybe about other companies as well…… Its a step in the right direction!!!! Also, the question is how come the SMILE GROUP and Its Companies are doing all this….. Why are they cheating customers…. The Mails between their CEO and others clearly shows that they are in the know about such things and still haven’t stopped it!!!!!
      Great Journalism!!!!!
      This is like saying all politicians are bad, so why go after the ones against whom you have some proof!!!! Great thinking!!!!!
      Keep it up Iamwire!!!!!

    • http://www.therodinhoods.com the rodinhood

      Anshai why don’t you spread some facts and create a positive impression of the same group ??

    • adi

      I guess Anshai Goenka is from FNY(fakesandyou) … vehemently hinting customer complaints as ‘vested interest’ … just like after every scam , all the politicians would blame it on a ‘conspiracy’. I would strongly suggest that rather than crying wolf, every a customer lodges a complaint, try and introspect upon your trading practices.

      I think people take too much time ‘reading between the lines’ when the WRITING IS ON THE WALL. If you must, please order a ‘new’ blackberry or a samsung from FNY(fakesandyou) and then suggest this thread/site as a tool of personal vendetta :)

      Also, as my experience is limited to FNY(fakesandyou) I cant really comment of similar practices by other e-commerce outfits,as I stopped buying stuff online.

  • http://www.mounish.me Mounish

    Good Article… :)

  • Rajeev

    I have a small business in fashion and coming up with an e-commerce site to sell Jewelry, Bags and other accessories.. It’s really scary to hear about these malpractices adopted by some e-commerce companies backed by huge VC Fundings.. Seems like same kind of curroption as in our polictical system.. The management might be doing something to create hidden wealth for them while not caring about real development of Indian e-commerce space. Those guys should really stopped otherwise it’s gonna hurt a lot to real and honest e-commerce companies (which have seldom chances to get any funds as they lack manipulative skills).
    One should care most about customer satisfaction. Retaining old customers are as important as getting new ones..

  • Ranjeev

    Good follow-up post the Smile group article

  • SBK

    Companies that sell fake/tampered/unethical products should be labelled as smugglers and tough legal action should be take against them. Right of consumer should be protected at all cost for online purchase who makes the decison to buy online by just seeing a product image based on trust.

  • http://www.therodinhoods.com the rodinhood

    THE RODINHOODSWhere Enterprising People Meet!
    e-Commerce : The joy ride. BUMP !!!
    Posted by kinnari thacker dave on January 12, 2012 at 5:12pm in Talking PointsView Discussions
    0digg
    My e-commerce joy ride has come across a bump.

    I recently ordered a Blackberry from fashionandyou.com [order no : 1299114]……http://therodinhoods.com/forum/topics/e-commerce-the-joy-ride-bump?commentId=6328457%3AComment%3A66626

  • Amit Bhartiya

    The above is a good cause and in good time too. The fault somewhere lies with the model itself and our greed. Flash sales or daily discounts or heavy discounts on goods (I can understand services) cannot
    Be sustained beyond a point. If one looks at the largest and most popular online categories, phones are
    Certainly among the top 3. But anybody who knows the mobile phone distribution chain will know that
    Its merely a 5 – 10 pc margin business. The only way to give deeper and more attractive discounts on
    Mobile phones is either to trade a lot of an old or discontinued or unsuccessful model (available from the distributor or some dealer) or to source such deals from other countries or markets and sell them with a clean conscience (as long as it is branded and it works, that’s where our responsibility ends). This ends up being a pain for the customers while given the deep and discerning discounts for current mobile models, we all jump into these deals and rely on some sort of credibility built by brands such as the one mentioned above that if they are selling something, it must be ethical or proper. I have heard of similar practices being followed (not blaming anyone in particular) even when it comes to other fast moving goods like branded watches where all that the field sales executive, with daily targets, cares about is cheap sourcing and branded goods – quality can take a backseat. Why not curb our desire for such deals on fast moving products and discourage these unsustainable business models?

  • vin

    adhi and Shailesh

    to solve this online buying pain in india, i have come up with good concept to shop locally. project is under development will let you know when its ready.
    i will post the name of the site in a month.

  • http://beingthesaint.wordpress.com Saint

    This is the way to go. The youth of India are waking up to the moment and pooling in what they can to get rid off corruption, malpractice and other contagions that is plagued our societies. The Internet has bounties to offer to the common man, the consumer, the producer and the investor alike. It is a very good effort on the part of Iamwire team that they have taken up to the task of awakening. Now I would like to purchase something online.

  • adi

    As a customer of Fashionandyou.com, I have been at the receiving end of such dubious gadgets. I made a purchase of blackberry model no. 9530 through their website, some time ago. I was appalled to find ‘Verizon’ & ’3g CDMA’ inscribed on the phone. To add to my woes Vodafone declined my request to activate blackberry services, as their system identified the device as probably ‘stolen’ or/and ‘illegally modified’.Upon contacting their customer care, I was blatantly told that “we sell phones & other electronics on “as-is where-is basis”, and further refused to accept any liability of the product.Hence, I now own a paper-weight in shape of a blackberry phone somewhere in my office,
    Post this experience, I now refuse to buy products online.
    I think its high time that companies like fashionandyou.com put an end to this long running corporate fraud & the authorities do something substantial about such cons carried out by petty thieves masquerading as e-commerce outfits. They are no better than slim jims selling fakes at places like the infamous Gaffar Market & chor bazar.
    At a time when the Indian e-commerce space should be brimming with customer confidence, companies like fashionandyou.com are doing every bit to shake the very foundation that this sector depends upon.Principals of ethical trade practices are brushed under the carpets along with customer complaints, but for how long ???

  • Shailesh

    Friend, this is it, i wanted to share my deep dissatisfaction somewhere. I am a victim of same case, i have all email, bill with me and the phone please help me get my money back

  • Shashi Gupta

    Great work folks!

    Looks like inception of a movement “Clean eCommerce in India”. Good work, the market need to understand what they are doing wrong. Best we correct ourselves now and grow a healthier online industry.

    BTW I too bought a phone later last year from FNY, it was locked and i was asked to send that phone back to them in 10 days or they won’t accept it bull####! and I am sure there would be many more.

  • vin

    This is a very good info for the entrepreneur. I have many websites running from quite some time. Some are done to learn about the market and some to test the concepts. I am going to shut few website which are not in use and more vigilant going forward.

    Thank you for posting this article.