German e-commerce giant Zalando, backed by the Stenbeck investment holding company Kinnevik, which hold the largest part of the shares, is facing an enormous economical blow. Early this year, the company changed its payment algoritm, allowing more people to make purchases using invoice.
This was instantly used by several criminal fractions. We can now reveal how it happened.
- Under false flag, numerous names and addresses ordered goods from Zalando’s site.
- Merchandize was collected – but the orders vanished.
- Zalando were left with a large number of unpaid invoices.
Zalando opened up for more customers to pay against invoice during shift from 2014 to 2015. After that, the fraud exploded. Before Zalando’s management tightened the company’s rutine for purchases through invoice, the counterfeiters had managed to order clothes for several tens of millions dollar. The exact sum is unclear, but according to Zalando’s estimate in its last quarterly report the sum is about 18.5 million euro.
The fraud has raised questions among some of the larger institutional investors.
“It is utter disbelief that such an amount of money can disappear. Does the management have serious control?”, says an investor that Breakit have spoken with.
But Zalando claim that problems of this kind, by fraudulent, is a problem within the sector as a whole and not related only to Zalando.
“The e-commerce sector is not short of examples when it comes to fraud. As soon as we notice the problem, we act and there are no ways to manipulate our systems today. It’s tough to protect oneself against organized crime”, says Zalando PR spokesperson Kristin Dolgner.
She states that German police are investigating the case.
“When this appeared, we contacted relevant authorities, of course”, Kristin Dolgner says.
But Zalando have no hope of regaining the €18.5 million which have vaporized into thin air.
“We have accounted for these costs during the first part of 2015. We hope, of course, that the guilty parts will be apprehended and that we will get our money back, but it is not something we count on”, Kristin Dolgner says.