Myntra reports Rs 1.1 crore loss due to scammers exploiting refund loopholes: Here's what happened

While customers often worry about online scams, fearing fake websites, payment frauds, or receiving faulty products, companies are also grappling with the financial toll of scams of a different kind. Myntra, aleading e-commerce platforms in India, has recently reported a significant scam to the Bengaluru city police. Between March and June this year, the company lost Rs 1.1 crore due to fraudulent activities. However, reports suggest this is just a small part of a much larger problem, with estimates indicating that fraudsters have cheated Myntra out of about Rs 50 crore across the country.

According to a TOI report, the fraud operates by exploiting the complaint and refund mechanisms offered by e-commerce companies.

Criminals place bulk orders for branded items such as shoes, apparel, handbags, watches, and cosmetics on Myntra's platform. These orders are often paid online or using the cash-on-delivery (COD) option.

Once the items are delivered through Myntra's logistics system, the fraudsters file false complaints.

Common complaints include receiving fewer items than ordered, claiming the wrong product was delivered, or stating that the products were counterfeit or not delivered at all.

This allows them to secure refunds through Myntra's refund options.

A police official explained that fraudsters may order multiple items, such as ten pairs of branded shoes, then report receiving only five pairs.

Refunds are then claimed for the missing five pairs. Additionally, some apparel fraudsters complain about mismatches in color or size, further triggering refund claims.

Myntra's enforcement officer, Sardar MS, informed police that the losses arose from over 5,529 fraudulent orders delivered across Bengaluru alone. The fraud came to light during routine company audits.

Although the company hoped to file a complaint covering nationwide losses, Bengaluru police advised them to limit the complaint to city-specific losses.

The investigation indicates that a gang from Rajasthan, primarily based in Jaipur, is orchestrating these scams.

Many orders are placed with delivery addresses in Bengaluru or other major metropolitan areas. Often, these orders are sent to locations like tea stalls, tailoring shops, or small local businesses.

Adding to this, cybercrime police recently arrested three individuals from Surat, Gujarat, involved in a similar fraud scheme targeting another e-commerce company, Meesho. The trio cheated Meesho out of Rs 5.5 crore by employing deceptive schemes.

These patterns reveal a significant rise in fraudulent orders exploiting the complaint system. As e-commerce platforms ramp up efforts to combat these scams, the risks for companies remain high, especially without tighter oversight or technological solutions to identify fraudulent claims in time.

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