Fraudsters tried to deceive Apple by exchanging 5,000 fake iPhones for real ones

Two individuals from China were convicted of attempting to deceive Apple by submitting over 5,000 counterfeit iPhones (valued at over $3 million) in exchange for authentic devices. The fraudsters now risk facing up to 20 years behind bars.

The fraudulent operation exploited Apple’s one-year warranty for new iPhones, which permits users to return defective devices for a complimentary replacement. Apple further provides additional insurance plans to prolong this warranty period.

Apple presents multiple avenues for customers to submit faulty iPhones for repair or replacement. These options encompass free shipping of the phone to Apple via UPS, visiting an Apple retail outlet, or approaching an authorized repair and service center.

According to the US Department of Justice, from July 2017 to December 2019, Haotian Sun, Pengfei Xue, and their cohorts Wen Jin Gao and Dian Luo manipulated this Apple service to swap as many counterfeit iPhones as possible with real ones.

“The objective of this scam was to illicitly profit the conspirators by deceitfully acquiring authentic iPhones from Apple after submitting counterfeit iPhones for repair and replacement,” the indictment declares.

The authorities uncovered that the fraudsters were dispatching fake devices from Hong Kong to Commercial Mail Receiving Agency (CMRA) boxes at UPS branches. These boxes were accessed using legitimate driver’s licenses and university ID cards.

Sun and Xue then submitted the counterfeit iPhones with bogus serial numbers and IMEIs to Apple retail stores or authorized vendors, and in exchange, received new smartphones from the company. Subsequently, the genuine devices were shipped back to Hong Kong to other members of the fraudulent scheme for resale. In total, approximately 5,000 fake iPhones were exchanged with Apple, resulting in an estimated loss of $3 million for the company.

Such activities could not remain undetected for long, and American postal inspectors apprehended the culprits in December 2019. This week, a jury found Sun and Xue guilty of mail fraud and conspiracy to commit mail fraud. Each now faces a maximum sentence of 20 years in prison. The sentencing is scheduled for June 21, 2024.

It’s noteworthy that this isn’t an isolated incident. In 2019, several individuals in California faced similar charges for exchanging nearly 10,000 counterfeit smartphones and iPads with Apple, compelling the company to replace them with authentic ones.

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