Frauds on Smart Phone financing Scheme

Mobile phone retailers have called for scrapping of the popular financing schemes without down payments saying 10-12% of all such purchases were fraudulent, resulting in financial losses, boosting grey market sales, and retailers being banned by non-banking financial companies (NBFCs).

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 in a bid to curb misuse.

Financing schemes are one of the most popular ways of purchasing high-end smartphones, with one out of three handsets purchased in 2023 using monthly installments, according to Counterpoint Research.

However, these long-tenure monthly installment schemes are being manipulated by individuals to obtain cash and commit fraud.

Retailers have especially highlighted a 24-month long installment scheme with zero down payment valid on Apple iPhones.

What’s happening?

• Individuals looking for cheap loans roped in by fraudsters to buy phones via financing
• These Phones are then sold back to fraudsters at a lower price
• These people subsequently resell them in grey market
• After a period, buyers falsely claim they never received the product
• This helps them avoid repayment

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