Club Factory leaves its sellers in India in a lurch – puts payments worth lakhs on hold

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  • E-commerce app Club Factory was one of the 59 Chinese apps banned by the Indian government.
  • The sellers recently got an email from Club Factory that the company will not be releasing their payments until the ban is lifted.
  • Sellers are even more worried because in their experience every communication with Club Factory takes a long time, because the company always says all their representatives sit out of China.
E-commerce app Club Factory was one of the 59 Chinese apps banned by the Indian government. The pending orders and payments for the sellers on their platform is now stuck.

“The last tranche of payments are pending from Club Factory’s side. They told us they are keeping the payments on hold until the ban is lifted,” a seller told Business Insider, whose pending payments with the company run into lakhs.

The sellers recently got an email from Club Factory on July 13 that the company will not be releasing their payments until the ban is lifted, evoking the force majeure clause. Not just that, sellers are also worried about the deposits kept with Club Factory in the form of an escrow account, from where the platform used to release money in parts.

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On Thursday, All India Online Vendors Association (AIOVA) sent a legal notice to the company for non-payment of dues. "Marketplaces are bound by RBI directives to keep money collected on sellers behalf in escrow. No force majeure can be applied to escrow. In case of non-compliance we shall be forced to go to court against this misconduct,” an AIOVA spokesperson told CNBC TV18.

Sellers are even more worried because, in their experience, Club Factory takes a long time to respond. The usual reason cited by the officials is that all their representatives sit out of China. “Even when everything was fine, if we had to reach out to them for anything, the communication would take ages because they would always respond that authorities are in China,” said the seller.

Club Factory is also currently under the scanner for alleged tax violations. According to reports, its offices in India were searched by Directorate General of Goods and Service Tax Intelligence officials, along with the offices of logistics companies hired by Club Factory – Delhivery, XpressBees & EComm Express.

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