New Delhi: Mobile phone retailers have called for scrapping of the popular financing schemes that allow individuals to purchase products without any down payment, saying 10-12% of all such purchases were fraudulent. These frauds, they said, result in financial losses for retailers, boost grey market sales, and lead to lenders banning stores.
They have also demanded enforcement of open-box deliveries with documentary evidence of handing handsets over to customers along with biometric verification when processing loans to curb misuse.
Financing schemes are one of the most popular ways of purchasing high-end smartphones, with one out of every three handsets purchased in 2023 using monthly installments, according to Counterpoint Research. However, these long-tenure schemes are being manipulated by individuals to obtain cash and commit fraud. Retailers have especially highlighted a 24-month installment scheme with zero down payment valid on iPhones.
“This scheme is being exploited by fraudsters and individuals within the system to facilitate cash funding by involving individuals looking out for loans at a cheaper rate of interest,” according to a letter written by the Organised Retailer Association to TVS Credit, an NBFC that facilitates loans to purchase phones. ET has seen a copy of the letter.
According to industry executives, Apple is aware of the issue, but has not received much evidence of cases of fraud from retailers to investigate further. TVS Credit and Apple did not respond to ET’s queries.
ORA president TS Sridhar told ET that NBFCs have been made aware of the issues but they continue to collect money from stores by threatening to block their access to credit schemes.
