Charging document - Fake iPhone sales netted fraudsters $12 million over time.
In recent times, there have been multiple reports of individuals getting tricked into purchasing fake iPhones. However, it appears that a group from California has taken this scam to a whole new level - they managed to fool Apple itself with counterfeit iPhones over a span of several years. These individuals were eventually arrested.
The US Department of Justice shared this news earlier this week in a statement. Five Chinese nationals, who were living in the US, are said to have scammed Apple out of at least $12.3 million. This took place over a period of almost ten years, between December 2014 and March 2024. This was done with meticulous planning.
Massive Fake iPhone Conspiracy
What made this scam possible was the use of counterfeit iPhones. The perpetrators obtained these iPhones from their partners in China. They took advantage of Apple's extremely customer-friendly approach in the US - if you bring a malfunctioning, but AppleCare-covered iPhone to an Apple Store, you often receive a replacement device on the spot. If not, Apple repairs the devices. The fraudsters used this to their advantage: they exchanged their fakes for genuine iPhones.
In total, they smuggled over 16,000 iPhones and other Apple devices into the stores. To accomplish this, they employed a well-planned strategy. They didn't count on the carelessness of the employees but deliberately equipped the fakes with serial numbers that were still valid in the US under warranty. The actual devices were then transported to China and sold at a significant profit.
There were instances when the scheme was not successful. Occasionally, the Apple Store employees became suspicious and refused to accept the fake iPhones. The fraudsters then reportedly tried to evade the situation by claiming they had bought the device from an Apple Store.
Covering Their Tracks
Another reason behind their success was their implementation of intricate measures to evade detection. The group visited numerous Apple Stores in several California cities. In some cases, they visited more than ten different Apple Stores in a single day.
To keep their activities undetected, they established an elaborate system of post offices. They purposely made minor mistakes in the addresses to prevent detection due to the same address. The method employed by this band remains unknown, but they were eventually apprehended.
If found guilty of these charges, the group could face sentences of up to 20 years in prison for fraud-related offenses and identity theft.
A Desirable Target for Fraud
The design of the scam is unique, and its exposure is not. In 2019, two Chinese nationals were convicted in the US after acquiring 1,500 replacement devices for their faulty iPhones from Apple. In Switzerland, a mother and son duo also profited from this method. They exploited the fact that Apple doesn't open the case of an iPhone in case of water damage and exchanged faulty phones for genuine iPhones, earning over a million Swiss francs. You can read the full story here.
