Gully Labs Co-Founder Arjun Singh has shared how his sneaker brand lost ₹2 lakh in one week. He blamed it on a customer service executive who allegedly caused the company harm through fraudulent orders.
“We hired a CS person a couple of months ago. Within the first week of joining he made INR 2L of 100% discount orders – sent to his friends and quit in a week,” Singh wrote on Twitter (now X).
Singh’s post was in reference to an observation by Akshay G Jain, the founder of Ludhiana-based D2C fashion brand Mlada.
“As brands grow, they have newer set of challenges. Never thought I have to guard customer details, order exports from people in the same organisation due to security concerns. Increases complexity, but no choice,” Jain wrote.
What apparently happened
The customer service employee allegedly used a simple but clever method. The startup, founded in 2023, sells sneakers priced between ₹4,000 and ₹8,000 per pair. Customer service staff are allowed to offer limited discounts of 10-20% through the company’s backend system.
This employee gained access to the admin panel and created special 100% discount codes. These codes made the system show that certain orders were fully paid even though no money was actually received. He then allegedly placed orders for himself, his friends and his family using these codes.
Since the system marked the orders as paid, the warehouse shipped the sneakers without suspicion. In total, goods worth about ₹2 lakh were sent out without payment.
After allegedly committing this fraud in his first week, the employee reportedly resigned and disappeared.
Company action
Arjun Singh also shared what the company did after it had identified the issue.
“When caught – initially he decided to cooperate and returned half the shoes but the other half were used etc. Then he started sending legal notices that we were harassing him in response to our notice to return the products or reimburse us!” Singh wrote.
“So now – we are enabling permissioning on our backend etc. amongst other things,” he added.
Social media reactions
Entrepreneur Prashant Pansare shared a similar experience, “When we were doing really well on spiritual products and services, we hired CS to interact to collect data and payments. This guy, after learning for few months, collaborated with his friends to clone webpage to offer competing services.”
“He would collect phone numbers and then ask customers to pay to the other page selectively every day. Siphoned off multiple lakhs,” he further wrote.
“Had to lock him up and some mor measures to recover. The story for some other day. Lesson is to keep guardrails in place and be vigilant. Never “blindly” trust anyone,” he added.
Another user wrote, “This is why early-stage trust culture dies fast. One bad hire costs ₹2L + legal fees + now you’re implementing enterprise-level access controls with 10 employees.”
“You won’t believe but that’s how Jabong got shutdown. They used to have flat 30% unlimited employees discount code and all their employees use to sell those discount codes to all family, friends, friends of friends and do unrecoverable damage to company,” posted another user.
“Dude! That’s a horrid story. Good thing it was caught. At times, I wish things like these were shared with the person’s profile,” came from another.
Shark Tank India
Gully Labs, founded by Arjun Singh and Animesh Mishra, appeared on Shark Tank India Season 5 and secured a major deal. Aman Gupta invested in the sneaker brand at a valuation of ₹175 crore.
