Apple Australia

According to a new report, based on court documentation, a pair of college students allegedly used a convoluted scam against Apple, which resulted in the company’s loss of hundreds of thousands of dollars.

The Oregonian was first to report on the charges brought against a pair of engineering students out of Oregon. Law enforcement says that the two students were able to employ a complicated scheme using counterfeit iPhone models and Apple’s own return policy to scam Apple out of a ridiculous amount of money. Court documents reveal the effort started back in 2017.

Then, the two students smuggled thousands of counterfeit iPhone models into the United States from China. They then sent the models into Apple to either repair or outright replace, claiming that the handsets would not power on at all. In many of the cases, Apple did replace the counterfeit iPhone models with real ones, which apparently led Apple to a loss upwards of $895,800. Prosecutors say the students then shipped the replaced, new iPhones back to China where they were sold for hundreds of dollars — where a third party entity then got a cut of the profits.

“Both Yangyang Zhou and Quan Jiang were in the United States lawfully on student visas, according to prosecutors. Zhou completed his engineering studies at Oregon State University this past winter and Jiang was studying engineering last spring at Linn Benton Community College, according to court records.”

Jiang allegedly submitted 3,069 warranty claims to Apple. The company granted 1,493 replacement iPhones over time, with the value around $600 per device. In June and July of 2017, though, Apple finally sent Jiang cease and desist letters, informing the student that the company was aware he was sending in fake iPhone models. Jiang did not respond to the letters.

However, the two students say that they did not know the phones being shipped to them were counterfeit. The pair are currently out of custody. However, Jiang is being monitored via GPS. As far as the specific charges are concerned, Jiang is being charged with illegally trafficking in counterfeit good and committing wire fraud. Zhou is being charged with illegally exporting goods.

Our Take

This is a crazy story, if for no other reason that someone was able to send in so many device requests, and Apple granted so many of them. And considering how often this was happening, with the endgame being so obvious, it’s hard to imagine that the two students were not aware that the iPhone models they were being sent were counterfeit.

[via The Oregonian]