Myntra, a Flipkart subsidiary, recently reported a significant loss of ₹1.1 crore due to a refund scam in Bengaluru. Fraudsters exploited the company's refund policy by placing bulk orders and then claiming refunds for non-existent, incorrect, or fake items.
The scam took place between March and June 2024, and involved around 5,529 fraudulent orders delivered to various addresses across Bengaluru.
The fraudsters would often claim that the number of products received was less than what they had ordered, or that the items were different from what was ordered.
Myntra has approached the Bengaluru police to investigate the matter. It's suspected that a gang from Jaipur, Rajasthan, is behind these fraudulent activities. The police have registered a case under the Information Technology Act and IPC sections 419 (cheating by personation) and 420 (cheating and dishonestly inducing delivery of property).
Myntra's case of fraud comes within a few days after another e-commerce platform Meesho faced similar cheating by fraudsters. Cybercrime police in Surat arrested three individuals who cheated Meesho by posing as suppliers and customers. They placed orders and then claimed refunds or raised complaints about the products received.
Myntra is also working on tightening its refund policies and improving its fraud detection mechanisms to prevent such incidents in the future.
According to reports, Flipkart and Myntra may soon start charging cancellation fees for orders that are canceled. The reports, that are still speculative, suggest that Flipkart and Myntra customers will only have a limited amount of time to cancel their orders. After that deadline is crossed, the customers will not be able to cancel the order. However, the e-commerce giant has not confirmed the development yet.
Besides, Myntra has recently ventured into quick commerce with its new service, M-Now, which promises to deliver fashion and beauty products within 30 minutes.
Myntra has bounced back to profitability in FY24 after a loss of ₹782 crore in FY23. The company posted a profit of ₹30.9 crore in FY24, driven by a 14.71% growth in operational revenue and effective cost-cutting strategies.
Getting back to rise in cases of frauds, e-commerce frauds in India have been on the rise, especially with the increase in online shopping. About 57% of all fraud incidents in India are platform frauds, with over 26% of organizations losing over USD 1 million due to it, said a report by PwC India.
Payment Fraud accounts for 92% of all customer frauds, including unauthorized digital purchases and identity theft. Around 40% of platform frauds are conducted by internal actors, often in collusion with external perpetrators.
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