Mobile phone retailers have flagged alleged malpractices in an ongoing device exchange offer from Korean smartphone major Samsung that exposed retailers to risks in regulatory compliance. Samsung did not respond to ET’s queries.

Samsung, on its part, has taken corrective measures. In an updated scheme letter for January, the company no longer asks retailers to deal with old devices by themselves. The company has given a list of devices that can be upgraded for a new device.

But retailers allege company’s “smart upgrade offer” not only jeopardises customer privacy, but the scheme’s clauses place responsibility of all wrongdoing on the retailers. According to the upgrade offer scheme, a copy of which ET has seen, Samsung has outlined retailers should be the ones engaging in trade of used mobiles collected as part of exchange offer.

In practice they said Samsung’s in-store representatives take customers through steps to avail the offer at retail stores. They often just upload the IMEI number on the company’s database without physically obtaining the old handset. Industry executives aware of the matter, however, said the scheme does not require handing over old devices to Samsung. Instead, the company notes the IMEI only to prevent customers from misusing the scheme.

These exchange offers have fuelled growth of premium smartphones in India, market trackers said. “Dealers are not involved in purchase or sale of used handsets in Samsung upgrade scheme. This discrepancy poses a risk to dealers, as the scheme letter may be referenced in investigations by statutory authorities, regarding GST,” the All India Mobile Retailers Association said in a letter to the company ET has seen.

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