Consumer Issues
Telecom companies in the red; and your payment blues...

Have you ever been sent round the bend by a telecom company, which has not updated your payments, and are you in danger of losing it?

Revenues and profits in the private telecom companies are headed in only one direction—down. As a result, it appears as though all sorts of methods are being used by the telecom companies to increase revenues and reduce costs, which in turn impact mostly the customer. Despite high decibel ad campaigns which appear to send out mixed messages, often vapid, none of them appear to remotely ever mention accountability. Consider the following ads you may have seen:


# Jo tera hai voh mera hai, jo mera hai voh bhee mera hai

# Cheating at carrom or promises on birthdays

# Make an aged man of a virile young actor

# Post-paid or pre-paid, what an idea?

#And many more equally inane campaigns...


How do these high-cost ad campaigns in any way address the real issue—to the point that there appears to be some sort of attempt across levels by all telecom companies to try and squeeze as much as possible from customers.


In addition to increasingly frequent complaints of lack of accountability in both pre-paid and post-paid connections, both voice and data, is a new one that appears to have kicked in with great gusto lately (particularly post-paid). This is what could be called the “don’t update customer’s payment records” method of increasing revenue. Typically, the strategy appears

to be to tire customers out, and with the increasing ease of using online and plastic payment options, get ready to be sent round and round by the usual call-centre and customer service support mechanism, for something which should not have gone wrong in the first place.


This is how it goes:


When you pay by plastic, online or by person, the transaction has well and truly been co-linked to the specific customer number, the phone number, and the specific amount of money received between you and the telecom company. These are, in turn, linked with a specific transaction reference number generated by the telecom company. In effect, transaction reference number ONE.


There is, however, in addition, another transaction number linking you and the telecom company to the bank, the credit/debit card company, as well as the payment processor. Obviously, the bank, card company and payment processor do not know which specific phone number the amount is for, unless there is a separate three-way mandate. This is transaction reference number TWO.


The most dangerous thing you can do, be assured, is to blindly sign mandates making what are essentially two separate two-way transactions, into a three-way contract. The telecom company will try to lock you into an auto-debit contract, please stay well clear and far away from such potentially dangerous situations. You will need to make sure that each bill and each payment is a separate series of the two transactions shown above—and here’s one example why:


1) An online payment of Rs750 was made sometime in the third week of June 2012, and all acknowledgements as well as both transaction reference numbers were generated. Confirmations from the telecom company, by email and SMS, and likewise by the credit card company, were also received.


2) However, the customer profile on the telecom company's website did not reflect the credit to account of this payment, and it vanished somewhere. When this happens, you are supposed to contact the telecom company’s customer care centre by phone or online. As expected, they were totally unhelpful, meanwhile the due date kept getting closer.


3) Once you cross the due date, the telecom companies have you in their grip, and all sorts of other charges start getting levied. If you have an automatic mandate, they will shamelessly debit your account, even though it is their fault.


4) In addition, this sort of disputed payment starts showing up as ‘unpaid’ and destroys your credit rating, which is another aspect altogether.


How to fix this?


The telecom customer service people do not have access to the transaction numbers generated by the credit/debit card company for you, which typically shows up on your bank/card statement in the next cycle, and is also mentioned in the email from the credit card company. So what the telecom company people do is, instead of running an internal trace of the lost money on their own telecom reference number or phone number, they ask you to provide a copy of your card or bank statement. This is now even more dangerous.


Once you do provide these details, which in itself is a risk, the telecom call centre knows how to continue to make you go round and round till you give up. Interim, the core issue, the money that vanished, never gets resolved. It is important to remember here—money paid through the payment processing/plastic money industry never vanishes. It gets diverted, by fraudulent means, to either the corporate itself or to other entities along the way. This is not some conspiracy theory; I have worked in this industry and know the mindset.


Typically, how much time, energy and money will the average customer spend to chase a figure like, say, Rs750, with added penalties rocking the horizon some more? That's the key.


So what’s the solution?


1) Make an additional payment, of a similar amount, but slightly different. That way the telecom company will not attempt to confuse matters more by trying to shuffle both payments. Nor will they threaten to disconnect. So, if the outstanding was Rs750 and you paid Rs750 the first time around (which vanished...) then make a cover payment of Rs755 or something like that.


2) Give the telecom company the reference number generated by your credit/debut card company, as well as the time & date, which proves that the money did go to the telecom company. Do NOT give them a copy of your bank/card statement.


3) Separately, start a correspondence with your credit card/debit card/bank that the product or service for said payment was not delivered to you by the telecom company and that you want a chargeback for the bank/card company provided transaction number. Quote both transaction numbers in this correspondence.


4) Mark the telecom company in copy to the message to your card company/bank. And generate some more complaint reference numbers at the telecom company, so that your issue goes on auto-escalate.


After that, sit back and watch the fun, as well as the solution. No telecom provider wants to have too many complaints of non-delivery of a product or service against them. Fact is too many such complaints of non-delivery of product or service can majorly impact the credibility and track record of the merchant-the telecom company. And this becomes even more serious when they do not update their records despite providing enough evidence of details of both reference numbers.


Thumb rules—beyond a point don’t waste your time with the merchant/telecom company. Instead, just demand a charge back from the credit card company. You’ve already made a covering payment, remember? And go for number portability.


If you’ve paid by plastic, then the strong weapon of demanding a charge-back is your birth-right. Just don’t blindly sign mandates please. Ensure each payment is a separate transaction authorised by you, online or through charge-slip, with safety.


What happens when telecom companies are unreasonable on account of payments made by cash, and start demanding so-called outstandings sometimes going back 2-3 years or more? Or what happens when they over-bill, or even bill for services not provided—like many people complain about lately, especially on data plans?


Here, unless you have secured all cash receipts, you might well be out on a limb. The only way here is to keep an eagle eye out on whether they are updating their records or not, and insisting on paper invoices delivered to your address. There are also statute of limitations issues, but these tend to not work in favour of the customer, so please try and avoid paying by cash.





4 years ago

Nicely put.
I do not understand why we are forced to pay with our time and money for the problem at the service provider's end.
I had a really bad experience with Tata Docomo call center. Though you can easily reach them (for free, when I last checked) but they are UNABLE to help you at all - one guy simply told me that I am wasting my time talking to him and he won't be able to do anything for me :)
Airtel, though paid (I wish some regulator could penalize them for having us paying for talking to their executives), has been able to resolve all my issues.

Sorry, could not understand your statement:
1) Make an additional payment, of a similar amount, but slightly different.

Could you please let me know what do you mean by "similar amount, but slightly different" ? Different in which aspect ?

Thanks again, keep writing.


4 years ago

the latest position is now Airtel has allotted the No 9958337200 to some body during last week and Airtel is not replying over mail w.r.t. my complaint/claim because i had provided irrefutable proof. Airtel is a cheat my complaint ref is PR071500215 and they have updated their website with complaint resolved. WHAT THEY HAVE RESOLVED.

To: [email protected]
Cc: [email protected]>
[email protected],[email protected]
Subject: 9958337200
fine. my father is using Delhi No.9958337200 since June 2007. since he stays at
Delhi and Bangalore alternatively whenever he stays at Bangalore he doesnot use
this No on reaching Bangalore. Last time he landed up at Bangalore on March 29,
2012 and stopped using this number and yesterday night i had recharged this No for
Rs 200/- made payment to Airtel using net banking facility of CBI from A/c No
1171379732. recharge successful was conveyed over SMS in No 9958337200 with
validity upto 25.09.2013. which implied the connection was valid and functioning
yesterday but today morning when he was at Bangalore Airport on the way to Delhi
he found "no network coverage". Now he is back in Delhi and on hearing this i
logged a complaint with Airtel ( funny that to log this complaint Airtel charged
me ) using my No 9958229345 and the Customer care executive could not do anything
to resolve the issue. Later i received a SMS from Customer Care Manager with Ref
No CWBAR20715056236 registered on 15.07.2012 at 16.04 hours in my mobile
9958229345. treat this complaint as unresolved

The position is that you have allowed me to recharge in 9958337200 and
subsequently blocked the account which has been in use till yesterday night
because had received recharge confirmation yesterday night in 9958337200. so
activate the No 9958337200 without further delay by 5.00PM tomorrow or else i will
be constrain to approach Consumer forum, TRAI etc as this is a breach of trust and
nothing short of a fit case 420

MLMs now want to ‘invest’ money in India, really?

Will the forthcoming meeting of the Foreign Investment Promotion Board lead to much-needed tightening of the rules for global MLM companies operating in India, or will the politically powerful MLM lobby use it improve its current dodgy status under the Prize Chits Act?

The Foreign Investment Promotion Board (FIPB) will meet on 24th August to deliberate on the perils of allowing foreign direct investment (FDI) in multi-level marketing (MLM) companies, says a PTI report. However, experts worry that top multinational MLMs will use the meeting to legitimise their existence, which is currently uncertain under the Prize Chits & Money Circulations Schemes (Banning) Act, 1978.


Following reports of the FIPB meeting on 24th August, EAS Sarma, former expenditure secretary, Government of India, has written to Arvind Mayaram, secretary for economic affairs warning, “I apprehend that the FIPB route will be sought to be misused to obtain cover for these MLM companies which are nothing but a way to swindle the public to raise illegal funds to enrich unethical and anti-social persons.”


“Many of these (MLM) companies are not even registered under the Companies Act. Even those registered evade regulation. Those booked regroup under different names and continue to cheat the people. All these companies and those that promote them should be dealt with an iron hand and be prosecuted effectively,” he said. This follows several letters by him to the prime minister, ministry of corporate affairs, ministry of finance, Reserve Bank of India (RBI), Securities and Exchange Board of India (SEBI) and others, on the subject. All of this has been backed by a solid body of investigation and research by Hyderabad-based DIG V C Sajjanar.


Meanwhile, pressure against MLMs and various other ponzi schemes has been mounting. Moneylife has been exposing scores of the shady operators over the past two years. Moneylife Foundation, a not-for-profit entity has also sent a representation to the prime minister, urging for a complete ban on MLM companies or to bring them under the regulatory ambit of either RBI or SEBI.


A set of powerful MLMs, which are part of an exclusive closed club, called the Indian Direct Selling Association or IDSA (on the lines of the Direct Selling Association of the US) has been lobbying hard to make a distinction between their operations and those of others, who they call, fly-by-night operators such as SpeakAsia and Ad Magnet. In fact, the tens of thousand ponzi/double-your-money schemes that exploit poor financial literacy cause the biggest losses to Indians across the economic spectrum today. SpeakAsia, the most notorious of these in recent times, raised over Rs1,300 crore in under a year from 12 lakh people, managed to do so without even registering the parent company in India. Instead, a bunch of entities, which flew below the regulatory radar were registered all over India to act as collection agents that pooled the collections from SpeakAsia’s empanelment fees of Rs11,000 per identity and transferred them overseas. The case is important because various regulators including the RBI and the ministry of corporate affairs claimed not to have the power or jurisdiction to act against the company.


Moneylife has also exposed the links between Speak Asia and AdMatrix, both operating with a similar modus operandi to deprive people of their savings. We pointed out that both these MLM companies were started by the same set of people who are working together since 2003. 


MLMs, chain companies or networking companies—also known as chit funds or blade companies, have turned very powerful in several states which are ruled by regional parties and have strong political connections. Their political funding protects them from any action. Also, as Mr Sarma has pointed out, “Many of these promoters have political links and they approach various ministries in the guise of marketing companies and make overtures to protect themselves. They know that they can play one ministry against the other and get away with their loot.”


This is reflected in the fact that the ministry of corporate affairs (MCA) has been warning people against investing in the schemes (‘Multi-level marketing companies con many to benefit few’) while the FIPB wants to discuss FDI in these companies. A company like Amway, which would have been disallowed under the Prize Chits Act, entered India through the FIPB route. It has been embroiled in long drawn litigation on the subject. Interestingly, a MCA study itself concludes that “such (MLM) schemes are inherently money circulation schemes and sale of products is only a camouflage... (and) voilative of the Prize Chits and Money Circulation Schemes (Banning Act), 1978.”


According to the study, the products by multi-level marketing companies are “over-priced” to enable them to pay huge commissions to people sitting at the top of pyramid and earn exorbitant profits for the company.”Such schemes enrich the company and the top of the pyramid participants at the cost of 90% of the participants who are at the bottom two levels,” it said.


The study added that in the pyramid or multi-level marketing schemes ‘product’ “is only a way to disguise the real intention” and such schemes are primarily “a variant of the earlier money circulation schemes” without any products.


The study further said that now the trend was to introduce sale of products to camouflage real intention and to give an air of legitimacy, deceive the regulatory, law enforcement agencies, media and the public into accepting them as legitimate business.


“These pyramid schemes are so cleverly designed that unless a very meticulous investigation is done and the con game is properly understood, it would be difficult to establish the deceptive nature of the schemes,” it said.


The main difference, it added, between direct sales and pyramid sales is that in direct sales the person making the sales gets the maximum commission, while in pyramidal scheme the person at the top of the pyramid gets maximum commission.


“Such a compensation plan rewards enrolling more members down line rather than give incentives to sell directly to the consumers who are not interested in becoming members. The deceptive and fraudulent nature of such scheme is because very soon saturation is reached and more members cannot be enrolled,” it said.


The MCA study said, “The scheme is inherently deceptive because mathematically it is not possible to create an endless chain in enrolment. Such schemes are extremely dangerous from society’s point of view because to gullible public, the scheme looks very attractive. The opportunity of being self-employed and earning money sitting at home by contacting family and friends appeals to most of the people”.


In April, the then corporate affairs minister Veerappa Moily had said he has suggested to the home ministry to set up an SFIO-type special body to probe frauds by the multi-level marketing companies and chit funds in a time-bound manner.



Anil Kumar Sharma

4 years ago

Just few days back central governmment made it clear that there will not be any central agency to look into the affairs of MLM companies.

Read More:

Veeresh Malik

4 years ago

Some other ways in which these MLMs make money - usually cash without footprints - organise "get togethers" with invited speakers, organise "travel tours" for shopping and most of all, by selling their books / CDs / other mediums which contain so-called success stories. The other interesting aspect is that some of the larger MNCs are now looking at getting their products direct to customer, which may be fine, but some of these products are simply without any legitimate basis in India - no ISI/BIS, no FSSAI for foodstuff, often no adherence to any regulatory/mandatory requirements.

StanChart PE pumps in Rs250 crore in Inox India

Standard Chartered Private Equity has bought minority stake in Inox India, the cyrogenic storage and transport equipment manufacturer, for Rs250 crore

Mumbai: The private equity arm of British bank Standard Chartered on Wednesday said it has invested Rs250 crore in cyrogenic storage and transport equipment manufacturer Inox India, reports PTI.
Standard Chartered Private Equity (SCPE) has picked up a minority stake in the company and the infusion will be deployed for both organic growth as well as potential acquisitions, it said in a statement.
The statement, however, was silent on the exact stake picked up by the SCPE, which can offer colour on valuation.
The advent of shale gas exploration has increased the demand for cryogenic storage equipment, a precision engineering product used for storage and distribution of liquefied gases used in industrial applications, the statement said.
"The unprecedented shale gas supplies in the US are driving the use of LNG as a cheap and clean fuel in transportation and industrial applications," SCPE's managing director Mukul Nag said.
Yes Bank acted as the transaction advisor for Inox India while Khaitan and Company and Wadia Ghandy and Company were the legal advisors for Inox and SCPE respectively, it added.
SCPE, which invests $20 million to $100 million in mid to late stage companies, has earlier invested in GMR Airports, Redington, Varun Beverages, Greenko, Privi Organics, Bush Foods, Innoventive Industries, Karaikal Port and Craftsman Automation, it added.


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