Paytm Mall, the online marketplace business of Alibaba-backed Paytm, said that there could be a potential cashback fraud of over ₹10 crore involving a few employees and merchants.

Paytm’s founder Vijay Shekhar Sharma said the company got to know about a possible scam post Diwali last year, after the company noticed that a few sellers were getting a large percentage of cashbacks offered during the festive sale period.

The company has also recently hired consultancy and audit firm EY to conduct an audit and probe into the matter.

It found that some sellers in collusion with employees of Paytm were trying to siphon off cash backs by creating fake orders.

Sharma further said that the company has already initiated action against the “wrong-doers”, and a few sellers have been delisted. The incident of a possible fraud comes at a time when Paytm’s e-commerce business seems to be losing steam as it plans to pivot its current business model.

BusinessLine reported in March this year that the company has been scaling down its B2C (business to consumer) business, shutting down the fulfilment centres, and has almost stopped giving cashbacks, thus resulting in a massive drop in traffic to the Paytm Mall’s website.

According to SimilarWeb, a New York-based website that provides web analytics for businesses, the traffic to Paytm Mall has come down to five million per month in January 2019, a whopping 88 per cent decline from 45 million visitors a month in October last year.

According to sources, the company has decided to scale down the B2C model as it is not sustainable, and instead, focus on an online-to-offline (O2O) strategy.

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