New Delhi, February 2026 —In a startling revelation that has sent shockwaves through India’s Direct-to-Consumer (D2C) ecosystem, Arjun Singh, co-founder of the premium sneaker brand Gully Labs, has exposed a sophisticated internal fraud. An employee, hired just weeks prior, allegedly manipulated the company’s backend system to siphon off luxury footwear worth ₹2 lakh before resigning within seven days.

The incident highlights a critical vulnerability for scaling startups: the dangerous trade-off between operational agility and internal security protocols.

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The Anatomy of the “Zero-Rupee” Scam

Gully Labs, which sells sneakers priced between ₹4,000 and ₹8,000, provides its customer service (CS) staff with limited backend access to offer 10% to 20% discounts for grievance redressal. However, the new hire allegedly bypassed these restrictions within days of joining:

• System Manipulation: The employee gained admin-level access to the panel and created unauthorized 100% discount codes.
• Phantom Payments: These codes tricked the system into marking orders as “fully paid,” effectively bypassing payment gateways.
• The Heist: Orders were placed for the employee’s friends and family. Because the system verified the payment status as “paid,” the warehouse dispatched the goods without suspicion.

A Legal Counter-Attack

The fraud was discovered shortly after the employee resigned and vanished. When the founders tracked him down, the employee initially agreed to cooperate and return half of the stolen inventory but claimed the remaining sneakers had already been “used”.

In a bizarre twist, when Gully Labs issued a formal notice for reimbursement, the accused responded with legal notices of his own, alleging “harassment” by the founders. The startup is now overhauling its backend to implement rigorous “enterprise-level” permission controls.

The “Startup Culture” Crisis

The incident has triggered a wider debate among entrepreneurs about the “death of trust” in early-stage companies. Other founders shared similar horror stories, including cases of employees cloning web pages to siphon leads or abusing unlimited employee discounts—a practice that some industry veterans claim contributed to the downfall of major players like Jabong.

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Bottom Line

For Gully Labs—a brand that recently secured a high-profile deal on Shark Tank India at a ₹175 crore valuation—this ₹2 lakh loss is a hard lesson in internal auditing. As D2C brands scale, the “invisible” cost of a bad hire is proving to be far higher than just a salary. The era of loose backend access in the name of “fast-paced culture” appears to be officially over.