The head of Indian smartphone manufacturer, Ringing Bells has been taken into police custody due to allegations of fraud.
Ringing Bells attracted global media attention last year by promising to sell the ‘world’s cheapest smartphone’ to Indian consumers. The device, called the Freedom 251, would reportedly cost 251 Indian Rupees ($3.77) and had been open for pre-sale since February 2016.
At the time of its announcement, many questioned Ringing Bells‘ ability to deliver this product to customers without accumulating a massive loss. Others suggested that only a limited number of these phones would be sold, making the entire operation an elaborate marketing stunt.
These concerns that the Freedom 251 was too good to be true would appear to have been well placed. While some customers did indeed receive the device, which was due to begin shipping in mid-2016, many others reportedly did not.
According to the police, company director Mohit Goel is being held for fraud due to a complaint by a distributor that they have not received the devices they paid for. Reportedly, Ayam Enterprises paid for 3m Rupees ($45,000) worth of the devices, however only received an amount worth approximately 1.4m Rupees.
When the company attempted to contact Ringing Bells to demand the rest of their money back, they allegedly were given death threats. Police also confirmed that this was not an isolated case and that other parties were also reporting similar complaints about Ringing Bells.
Mohit Goel was reportedly due to appear in court this Friday, however, it is so far unclear whether charges have been finalized.
According to reporting by the BBC, a police spokesperson vowed to continue their investigation into the company. “It’s important for us to expose these scams because innocent people end up losing their hard-earned money,” he said.
The Freedom 251 is the latest in a string of high-profile tech flops, often related to poorly thought out, or intentionally deceptive business models.