Short-seller who flagged Wirecard scam accuses Truecaller of tax fraud, driving down its stocks by 20%

Every time a dubious caller or possible scam artist calls you, the words spam or fraud are flashed under the number, thanks to experiences reported by other users. This is possible thanks to Truecaller, which apart from allowing Indians to avoid unwanted callers, also protected them against spammers during the pandemic. But the scam detector itself now faces allegations of tax fraud, levelled by activist short-seller Viceroy, driving down its stock prices by 20 per cent.

The organisation has flagged scams before

The organisation, which had flagged German payment firm Wirecard’s fraud years before it caused the company to shut down, has also claimed that Truecaller’s business model will become redundant due to evolving privacy laws. Viceroy has suggested that Truecaller may be facing a GST fraud investigation in India, which accounts for 75 per cent of its user base after the firm mentioned that it was seeking approvals from RBI on GST and transfer pricing.

Has been in trouble over data security

Truecaller has already been facing trouble after an online intelligence firm Cyble claimed that the firm’s data on 4.75 crore Indians was stolen and put up for sale on the dark web. The Swedish startup on its part denied the allegations of a data breach and has also announced support for India’s data protection regulations. But Truecaller has been called out for collecting data without the consent of users by an independent European advisory on privacy called the Article 29 Working Party.

Truecaller had also been hit by a notice by the Bombay High Court last year, following a PIL that accused it of collecting user data and sharing it with some of its partners. The company had then dismissed privacy concerns and called the claim “false information”.

Short-sellers haunting top firms

Viceroy is led by Britain-based Fraser John Perring, who is an activist short-seller and had called Tesla overvalued in January this year, and the same was confirmed by Citi analyst Itay Michaeli in August. Activist short-sellers sell stocks of a particular firm, before sharing negative information that pushes the prices down, allowing them to repurchase at a lower rate. Viceroy’s report claims that regulatory action has forced Truecaller to avoid taxes through loopholes which will soon be plugged.