Two Chinese students based in Oregon have been accused of using fake iPhones as part of a scam, which robbed Apple out of nearly $900,000 (£689,000) in revenue and iPhone replacements. According to court documents, the pair ordered the fake phones from China before sending them to Apple to get them repaired.
Apple would often respond to their repair requests by sending them genuine replacement models, which would then be sent back to China to be sold for profit. The Oregon-based students, Quan Jiang and Yangyang Zhou, are Chinese nationals who were legally living in the US on student visas.
Also according to court documents, Apple do not immediately analyse or repair phones that have power issues. Rather, it often aims to replace them as soon as it can.
Cease-and-desist orders were sent by the company to an address associated with Jiang, ordering him to stop sending counterfeit phones in 2017. However, when questioned in an interview by a Homeland Security agent, Jiang denied receiving any of the letters.
Apple estimated that during the time of the alleged scam, it had received a total of 3,069 repair requests made by Zhou between April 2017 and March 2018. 1,493 of these requests had been completed, while the rest were returned because Apple engineers believed they had been tampered with, which therefore invalidated the warranty. However, the company claimed this had cost them $895,000 (£685,000).
According to documents, Jiang allegedly made 3,069 warranty claims, all of which he cited for “no power/wired charging issues”. Yangyang Zhou, on the other hand, has been accused of counterfeiting export documentation.
However, the pair have claimed they were not aware the phones they were sending for repair were counterfeit. The alleged scam was discovered back in 2017, after custom officials opened up a number of suspicious shipments from Hong Kong containing mobile phones.
While the devices appeared to be iPhones, having the same design and logo as genuine models, the method of shipping and packaging were suspicious to the officials. It was reported that Customs and Border Protection seized 95 fake phones being sent to the pair.
A search of Jiang’s home took place in March 2018, which turned up more than 300 counterfeit devices as well as condemnatory paperwork. Jiang has been charged with trafficking counterfeit goods and wire fraud, and remains out of custody on GPS monitory.
Yangyang Zhou has been charged with submitting false information on export documentation and also remains out of custody, and ordered no contact with anyone from Apple while the case is ongoing.
“With respect to Mr. Zhou, the government has the case completely wrong,” Zhou’s attorney, Jamie Kilberg, wrote in an email statement to CNBC Make It. “Mr. Zhou had no knowledge of any alleged counterfeiting scheme, and when the actual facts came out, we are confident he will be vindicated.”
However, Celia Howes, defence attorney for Quan Jiang, declined to comment. But, with clear evidence in this case, from recovered fake iPhones to the 3,069 repair requests made in one year, resulting in replacement phones to the tune of almost $1million, it’s obvious what’s been going on here.
Two Chinese students had been defrauding Apple with fake replica phones from China, and receiving authentic replacement phones, and we strongly believe that the two should face the full force of the law for their disingenuous scam upon a company that prides itself on great customer service, which we can all vouch for, so hopefully they will spend a worthy amount of time behind bars.
Story by Emily Clark
Featured Photo Credit: MensXP.com