Warning about risks when authorizing delivery companies to collect money on your behalf

After the incident of the GNN Express express delivery company abusing 5.5 billion VND in cash on delivery (COD) money from customers and then declaring bankruptcy, e-commerce experts warned online shop owners to be very careful with the COD service that is very popular today.

GNN Express delivery company went bankrupt due to abusing 5.5 billion VND from customers.

Mr. Tran Trong Tuyen, General Secretary of the Vietnam E-commerce Association (VECOM), cited statistics showing that nearly 90% of e-commerce payments in Vietnam today use the COD method.

The advantage of this method is that the buyer must receive the goods before paying the shipping company.

With this method, the shipping company collects the goods on behalf of the seller, then returns them at a regular weekly interval. Some shipping companies return the money to the customer every 2 days. Some other companies return the money every 3-4 days.

“This advantage solves the problem of Vietnamese people not being familiar with online shopping. That is a positive aspect, but it also has many potential risks,” said Mr. Tuyen.

According to Mr. Tuyen, when cash is handed over by customers to the delivery unit, the money will flow through very complicated channels. This can lead to obvious risks. The larger the delivery company, the wider the cash flow, the more difficult and longer and more complicated the collection. As for smaller companies, if they do not ensure sustainable development, the appropriation of COD money is also very likely to happen.

“The risk is that when the shipping company has problems, hundreds of sellers will lose a large amount of money. Obviously, COD is not the nature of e-commerce, because in principle it is a place where payment does not use cash,” Mr. Tuyen said.

The General Secretary of VECOM believes that if consumers and delivery companies continue to maintain a COD rate that is too high, it will be difficult for e-commerce to achieve rapid growth.

He believes that this type will still play an important role in the next 3-5 years, then it will decrease. The rate of non-cash payments will increase.

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“The core service of delivery companies is delivery, not COD payment. It is also necessary to encourage and create a habit for buyers to make cashless payments to reduce risks. In the near future, e-wallets and QR Pay will be popular,” he said.

Regarding the case of GNN Express, Mr. Nguyen Trong Tuyen said that there are currently no specific regulations on holding COD money from customers, if there is misappropriation or abuse, how will it be handled. However, he affirmed that when shipping companies and e-commerce platforms, shop owners all have contracts. The contract will stipulate obligations on holding, receiving assets, payment and return. If there is a mistake, it may have to be handled.

“GNN Express is a very small company, that is a warning and recommendation for sellers to choose reputable delivery partners, especially COD service. E-commerce in the current period is developing very quickly, so it is difficult to avoid certain risks. Consumers and shop owners need to be very alert,” Mr. Tuyen shared.