The future of on-demand grocery delivery app Grocemania is in doubt after its bank account was drained of £20,000 in an alleged identity fraud.
CEO Askar Bulegenov said he became aware of what he called a “severe breach of security and identity fraud” last week, after receiving a notification from Metro Bank that £4,000 had been transferred from the account.
“When I first saw the notifications, I was calm, thinking it’s a technical mistake at Metro.
“As I logged into the bank app to block the account, all the money had gone already,” he added.
Grocemania offers an app and website allowing customers to order groceries for delivery from convenience stores in their local area.
While Grocemania’s mark-up on products and fees covers the cost of deliveries charged by partner courier firm Stuart – meaning deliveries will be unaffected – the emptying of the bank account on the day before payday means head office staff can’t be paid this month and Bulegenov warned that he was “afraid we will have to dissolve the team”.
“I can’t pay the team at all now and I don’t think they will be waiting around.”
Bulegenov told The Grocer he believes a former landlord at one of its distribution sites went to a Metro Bank branch and exploited a prior association with the business to deplete the funds.
But Metro Bank has disputed Bulegenov’s claim that it was a case of fraud. In a letter to Bulegenov Metro Bank said: “We were sorry to hear that you appeared to have been the victim of fraud. [However] “this case would be classified as a civil dispute. And we will not be able to take your case forward from a fraud perspective.”
Bulegenov is now imploring the bank to investigate the transactions further to find out how the individual “was able to manipulate security procedures and gain access to our account without proper authorisation”.
“The impact of this breach on our business operations cannot be overstated,” he wrote in a letter to the bank this week.
Bulegenov has also taken the case to the Metropolitan Police, and the fraud allegation has been logged with the UK’s national reporting centre for fraud and cyber crime, Action Fraud.
Head of Action Fraud Pauline Smith told The Grocer the incident is ”currently being assessed by the National Fraud Intelligence Bureau at the City of London Police”.
He is also seeking support from people with legal and police procedural expertise to help speed up the process.
Grocemania was founded in 2017 by Bulegenov and a group of fellow graduates of Kingston University. The company partners with the likes of Budgens, Nisa, Londis and Costcutter as well as independent convenience stores, offering customers deliveries in 30 minutes for a delivery fee of £2.50 on orders above £10 and £5.40 for orders below £10.
It launched several dark stores during the pandemic but wound them up in early 2023. The company now delivers from 560 stores.
In 2021 it crowdfunded £174,000 – with a company valuation of £2.4m – and struck partnerships with Unilever and PepsiCo on sponsored marketing initiatives.
The company has written to investors to inform them of the incident.
“It is with a heavy heart that I must bring to your attention a distressing incident that has recently transpired, affecting our financial stability and security,” the company told its 603 Seedrs crowdfund investors.
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