Apple 'repaired' thousands of fake iPhones before it smelled a scam

Apple 'repaired' thousands of fake iPhones before it smelled a scam
Counterfeit goods are a big problem for any established brand, but when Apple is involved, you know that there will be both demand and supply through the roof given the iPhone role as a status symbol, especially in Asia where most of the fake goods originate from.

Two Chinese students in Oregon,  Yangyang Zhou, and Quan Jiang, have been running a fake iPhone repair scheme since 2017, it turns out, defrauding Apple of $895,800 in total, according to the company's estimates. They had bulk shipments of counterfeit handsets shipped to them from China, and submitted those to Apple as "iPhone won't power on" cases, both online and in stores. The replacement phones were then shipped back to the source in China who deposited money into Jiang mother's account he had access to in the States.

Apple "repaired" (most likely just swapped them for refurbished ones) and returned 1,493 of the more than three thousand fake iPhones that were sent to its service before it got an alert that something was amiss on a grand scale. When the situation was raised with Apple's fraud department in the summer of 2017, they sent Jiang two cease-and-desist orders to stop the scheme but got no response, presumably since the notices were sent to Zhou’s listed address.

It's not clear if the fraud alert came within Apple, or the port authorities that have been investigating suspicious bulk iPhone shipments from China since the spring of 2017 but in any case, the scheme started falling apart for the two Chinese on an engineering student visa. Zhou's lawyer claims that his client will be "vindicated" as he did not know that the iPhones sent to him from China were counterfeit, and thought he was simply taking a cut for a service. 

Ditto for Jiang, who has been accused of wire fraud, as well as trafficking in counterfeit devices, so we'll see if Apple manages to retrieve anything from the scheme, considering that the repaired real iPhones have already been sent to the vast Chinese prairies.

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8 Comments

1. vincelongman

Posts: 5653; Member since: Feb 10, 2013

How the f**k did it take Apple so long to realise? Surely they must have noticed striaght away when they opened them up to be repaired for reselling as refurbished Or the an usual number of returns at certain stores/area

2. micego

Posts: 2; Member since: Dec 12, 2011

Right?! Surely after maybe 3-6 it would catch up to them. Like if you bought two 2017 iPhone 7plus or newer(which don’t have a sn on the back) and exchanged each one twice at different times and locations. Apple would just quickly look up your Apple ID exchange them on the spot in store. But mailing in I would think you wouldn’t really have a chance. Unless this points out a flaw in which Apple doesn’t open up phones with certain issues(like not turning on) For months on end and you have a period in which you could do this. But 1400 phones?!

4. lyndon420

Posts: 6599; Member since: Jul 11, 2012

They (apple employees) most likely just swapped them out for refurbished ones without taking a closer look at them. It's becoming quite well known now that apple isn't very big on doing repairs...they'd rather just replace the device (which I get because it's probably cheaper than having to pay someone to fix them).

9. vincelongman

Posts: 5653; Member since: Feb 10, 2013

I'm not talking about the dumb Apple Store workers I doubt they simply put them into a rubbish bin, they claim to recycle old iPhones They would send the counterfeits/broken phones to: 1. Repair center, where they'd be opened them up to be repaired for reselling as refurbished 2. Recycling center, where they'd be opened up and ripped apart for recycling At both of those stages it should have been noticed striaght away if the techican was half competent

3. monkeyb

Posts: 404; Member since: Jan 17, 2018

Although I did not get any counterfeit model replaced. I did get a couple of phones replaced through some eBay sellers. I never used to understand how they were able to help me get my phone replaced for a brand new one from Apple. After extensive online digging, I found out that these folks do something to the phone so they do not get powered on. And since the phones have a bit of warranty left (serial number could be identified by Apple by the sim tray and some other internal means), Apple just replaces them. I obviously stopped doing this because I felt it was wrong but I can tell you that its not Apples fault completely for falling for this trick. These guys create new Apple ids and profiles before making a trip to the Apple store. The amount of thinking that goes into this sounds insane (atleast to me).

5. sissy246

Posts: 7035; Member since: Mar 04, 2015

LMFAO They couldn't even tell they were fake, LOL

8. Xyzdragon

Posts: 10; Member since: Dec 23, 2018

Stuff like this makes companies rethink about customer service.

10. Nine1Sickness

Posts: 896; Member since: Jan 30, 2011

I worked at an official Apple repair facility. You’d be surprise by how many fakes come in. Probably 90% of the fakes passes inspection because the workers who inspect them are either poorly trained or just doesn’t care to toss them out because it will lower their numbers and they are scared they wont meet their quota.

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