Chinese ecommerce platform Club Factory seems to bounce from one has controversy to another. This time the company is the dock for allegedly selling “Schedule H drugs” without prescription. Schedule H is a class of drugs that cannot be purchased without a prescription from a qualified medical practitioner. India has classified 551 drugs under Schedule H till date.
As per a TOI report, the office of the joint commissioner of Food and Drug Administration has written to the food and drug regulatory body to investigate the matter further. In the letter, the joint commissioner has asked to investigate the drug licence of Sixsense Retailer in Surat for supplying drugs to a Mumbai-based Club Factory customer without asking for any prescription.
CEO Vincent Lou told Inc42, “Selling drugs is against our policy and third-party sellers found listing such products are immediately barred from our platform. We are working towards implementing measures to prevent the listing of such products under disguise in other categories. But some sellers do try to sell drugs and pretend they are selling something else.”
“We [Club Factory] are committed to work with concerned stakeholders and investigators to safeguard the interests of our valued users. We are also open to cooperating with other e-commerce players facing similar issues to curb such malpractices,” Lou added.
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The development comes at a time when the Indian government is still deliberating on the epharmacy guidelines to regulate the sales of medicines and drugs online. Retail pharmacy groups have time and again raised concerns over the unlicensed sales of drugs on online platforms without prescription. The delay in the government’s guidelines for epharmacies means many of them are stuck with legal cases.
Club Factory’s Run Of Controversies
Founded by Vincent Lou, Club Factory is one of the most popular famous Chinese ecommerce platforms in India alongside the likes of Shein, Urbanic and others. This month, the platform noted a fourfold surge to register over 100 Mn monthly active users. Moreover, it also managed to get 1 Lakh sellers on its platform, compared to 30K in December 2019.
Club Factory has been surrounded by controversies in India since its entry in 2016. These matters range from tax evasion to selling counterfeit products on its platform. The fashion ecommerce company, along with another Chinese ecommerce platform Shein, have been accused of marking their orders as “gifts” to avoid any custom duties.
The Indian government’s custom duty policy had a provision that allowed duty-free imports of gifts and samples as long as they’re below 5K. In September 2019, Delhi’s customs department had also confiscated such products from Club Factory’s warehouse. After the matter came to light, the Indian government decided to do away with the policy in November 2019.
Then in December 2019, Club Factory was accused of selling counterfeit products on its platform. A customer had filed an FIR against Club Factory and its top executives — Directors Jialun Li and Gatvit Aggarwal, CFO Ashwini Rastogi and grievance the officer — for planning a “criminal conspiracy” to advertise heavy discounts on popular brands and then shipping fake products to the customers.