Slim chance for ponzi-hit customers to get their money back

For millions of defrauded customers, getting back their money now appears to be a pipe dream with little or no account balances and assets in possession of scam-hit e-commerce companies against huge liabilities.

On top of it, the government has no data on how much money companies owe to customers, making money recovery even more challenging.

For example, e-commerce platform Dalal Plus that suspended operations with Tk137.93 crore payable to customers has zero balance in its two bank accounts – now frozen by the Bangladesh Bank, the central bank informs the commerce ministry.

Top officials of the online shopping platform allegedly withdrew all the money received in advance payments from customers without delivering products against the orders. The top executive of the company is now in custody.

The same situation prevails for the customers of Sirajganj Shop. The company is accused of swindling hundreds of customers out of crores of taka.

Some Tk474.75 crore – collected as advance payments from shoppers – were deposited in six bank accounts of Sirajganj Shop, the Bangladesh Bank says, adding the company withdrew almost the entire amount before closing offices. The present cumulative balance in the six bank accounts is Tk30.81 lakh.

Amid a growing uncertainty whether the defrauded customers of Sirajganj Shop would get back their money, another allegation of fraud has been brought against the company – that it has embezzled Tk47.43 crore from the mobile financial service (MFS) provider Nagad. Nagad has filed a case to recover its money, but the law enforcement agencies have not been able to arrest any of the accused yet.

The prospect of evaly's customers is even worse. Before getting arrested by the Rapid Action Battalion in mid-September this year, Evaly CEO Mohammad Rassel wrote to the commerce ministry, stating that his company owed Tk542 crore to buyers and merchants. Even if the information provided by Rassel is factual, it will be possible to clear only 9% of the firm's liabilities to customers with the money it currently has in its 13 bank accounts.

According to an inspection report of the Bangladesh Bank, the current asset of Evaly is only Tk61 crore while the collective balance in the bank accounts of the company amounts to Tk49.18 crore. That means, with all the money Evaly currently has, it can repay only one-fifth of its liabilities to customers.

According to Bangladesh Bank data, some Tk7,177 crore has been deposited by customers in the bank accounts of Evaly as of September this year, out of which Tk7,130 crore has been withdrawn by the company. Evaly started operations three years ago.

Officials at the commerce ministry feel the chances of getting back their lost money is slim for countless buyers who made advance payments ordering products at e-commerce companies such as Evaly, Dalal Plus or Sirajganj Shop before the launch of the escrow service last July.

The commerce ministry and the central bank have no information on how much of the money has been spent by the companies on delivering products to customers, and how much of it has been siphoned off. Government agencies concerned have no idea about the total amount the companies owe to their customers either, making it uncertain whether the repayment of customers' money will ever be possible.

The commerce ministry sent a letter to the Bangladesh Bank in October seeking details about transactions, assets and bank balance of 50 e-commerce companies, suspected by law enforcement agencies to have embezzled customers' money.

The central bank on Tuesday provided information about 30 out of the 50 companies in the list to the commerce ministry. The bank account numbers and transaction details of the remaining firms have not been found yet, the report says.

According to the central bank's data, 35 e-commerce companies, with allegations of not delivering products even after taking payments in advance, managed to rake in some Tk21,030.51 crore from customers. At present, the total balance in the accounts of these companies is only Tk388 crore, 1.84% of the total deposits.

The top 10 companies on the list – Evaly, Dhamaka Shopping, Eorange, Daraz, Alesha Mart, Sirajganj Shop, Foster, Qcoom, Ring ID, and Anonder Bazar — received a total deposit of Tk20,178 crore, which is 96% of the total deposits in 35 companies. The current balance in these 10 companies' accounts is Tk321 crore, which is only 1.59% of the money they received from customers.

Of the top 10 companies, only Daraz and Alesha Mart are still in operation. Top executives of Evaly, Dhamaka, Eorange, Sirajganj Shop, Qcoom, Anonder Bazar and Ring ID either have been arrested or are absconding.

Daraz faces no allegations of embezzling customers' money. On the other hand, Alesha Mart has been accused of not refunding customers after failing to deliver products. But no case has been filed against the company yet.

Commerce ministry officials say there have been occasional inter-ministerial meetings on refunding Tk214 crore of customers' money stuck in payment gateways, but no step has yet been taken so far to recover crores of taka embezzled by the ecommerce companies from thousands of customers. These companies do not have any assets that can be sold to clear the liabilities.

They fear that customers who have been deceived by e-commerce firms will have to wait a long time for getting their money back, just like the people defrauded by multi-level marketing (MLM) companies, including Jubak and Destiny about one and a half decade ago. A meeting chaired by Commerce Minister Tipu Munshi recently discussed the issue of selling the assets of the two companies and returning the dues to the customers but no decision has been made yet, said the officials.

Returning the money stuck at payment gateways to e-commerce customers is a big responsibility of the ministry, said AHM Shafiquzzaman, head of the Digital Commerce Cell of commerce ministry, adding that after receiving the list of e-commerce companies facing lawsuits, the ministry will refund the customers of companies that are not on the list.

It is learned that the ministry has not taken any initiative to reimburse the customers who lost their money before the launch of the escrow service, even though a large number of defrauded fraudulent customers are sending written requests to the finance and commerce ministries every day in the hope of getting their money back.

Hafizur Rahman, director general of the WTO Cell of the commerce ministry and former head of the Central Digital Commerce Cell, said investigations need to be launched to find where the companies have moved the money.

It will be possible to pay the customers back only if the locations of the money are discovered and the money is recovered.

Money withdrawn before accounts frozen 

As per directives from the commerce ministry, police and court, the Bangladesh Financial Intelligence Unit (BFIU) froze bank accounts of 17 rogue e-commerce companies and payment gateways to stop them from swindling customers out of their money.

They are Evaly, Eorange, Dhamaka Shopping, Sirajganj Shopping, 24Tkt, Boom Boom, Aladiner Prodip, Adiyan Mart, Qcoom, Needs.com, RingID, Dalal Plus, Nirapod, Foster, Rapid Cash, Dotline (play and win), and Uthao Cash. 

The beleaguered companies lured customers into paying them money in advance for products at big discounts. But they did not make the promised deliveries.

Eventually, the companies closed their operations with their owners either landing in jails or on the run. They already had withdrawn 97% of deposits from their accounts before the ban on transactions came into effect. The current deposits of all the companies now stand at Tk351 crore in total, of which 55% belongs to Foster, a payment gateway service provider that settled transactions between clients and controversial e-commerce platform Qcoom. 

The BFIU froze a bank account, having Tk194 crore, of Foster Payments owing to its alleged involvement in money laundering. Of the amount, Tk166 crore was owned by Qcoom's customers.

Small e-commerce sites, such as Adiyan Mart, Rapid Cash, Needs.com, 24Tkt, also withdrew all the money deposited by customers. 

So, most accounts that the BFIU froze have very low balance. Needs.com and Adiyan Mart, which received Tk17 crore in advance from customers, have only Tk2,000 in their accounts.

Balances in active e-commerce accounts even lower 

Some 13 e-commerce companies, the country's second largest company Daraz and the third largest Alesha Mart, are still active, but their accounts have only Tk37 crore, only 0.4% of deposited amounts. They received Tk9,148 crore in advance from customers. 

Alesha Mart allegedly did not refund customers either. It now has Tk2 crore, but its liabilities to customers stand at over Tk300 crore.

 The Bangladesh Bank has informed the commerce ministry that work is underway to collect and scrutinise Alesha Mart's account info.

In the meantime, Alesha Mart sent a letter to the commerce ministry, seeking a government bailout package of Tk300 crore to resume its operation and pay back the money.

On the other hand, Daraz with an investment from Alibaba, the China-based global e-commerce giant, is running business in the cash-on-delivery system too, and there are no serious allegations against this company. As of October this year, Tk6,539 crore was deposited in its 73 bank accounts, while the available balance amounts to Tk34 crore.

Among the companies that received more than Tk50 crore from customers, include Shrestha.com, Priyoshop, Bangladesh Deal and Akash Neel.

Customers deposited around Tk256 crore in accounts of these four companies. At the end of October, their accounts had Tk8.31 lakh.

Bangladesh Bank looking for bank account info on 20 more companies 

The Bangladesh Bank has informed the commerce ministry that the bank account information of 20 e-commerce companies has not been found yet. Five bank accounts of a company called Thole have been frozen. The central bank is working on collecting information on the remaining accounts of the company.