The Enforcement Directorate has frozen all the bank accounts, merchant IDs in payment gateways and fixed deposit of the Coda Payments India Private Limited (CPIPL) with a total balance of ₹68.53 crore, as part of a probe into the alleged unauthorised deductions from the accounts of unsuspecting online game users.
The agency also conducted searches on three premises linked to CPIPL. The ED investigation is based on multiple cases registered against the company and one “Garena Free Fire” mobile game alleging unauthorised payment deductions from end users’ accounts.
The CPIPL had so far collected about ₹2,850 crore, of which ₹2,265 crore was remitted outside India after retaining a certain percentage of the revenue for payment of taxes and nominal profits, said the agency.
The company facilitates collection of payments from end users, mostly unsuspecting children, of games like “Garena Free Fire, Teen Patti Gold and Call of Duty, etc.” for monetising and generating revenue for the web or game publishers, said the agency. As alleged, it resorted to unauthorised deductions against the sale of digital tokens to the players. The tokens are used to enhance online game playing experience.
According to the ED, the game developers like Garena and the CPIPL intentionally designed the payment mechanism in such a way that after first successful transaction, a notification would pop up seeking permission to make subsequent payments without any authentication.
“As the children are not aware of these technical terms, they just click on the notification in a routine manner and end up giving authorisation to make all future payments without any further authentication. Garena which publishes ‘Free Fire’ does not have a company or presence in India and is operated from Singapore,” said the agency in a statement.
During the searches, the agency found that Coda Payments India was allegedly incorporated to act as an agent of Coda Payments Singapore Pte. Limited for collecting money from the users against the sale of digital content and remitting it to the parent company. “...the entire operations of Codashop, which sells the tokens, are being managed by Coda Singapore only and there is no actual sale or purchase of digital content by the CPIPL,” it said.
