Hopefully, they were at least taking business classes, as they apparently know how to create a business and how to profit off it. Two Chinese engineering students figured out how to scam Apple out of $1 million worth of iPhones.
And now that this counterfeit iPhone repair scam story is out there in the news, others won’t be able to do the same, as most likely Apple is changing whatever methods led them to this. Or at least we should hope they are.
Counterfeit iPhone Repair Scheme
This is how the two carried out their scheme. Yangyan Zhou would smuggle counterfeit iPhones into the United States, and then Jang would take the counterfeit phones to Apple or would handle the transaction online via the online repair program. Apple would then replace the phone.
The two men would mail the phones to China and sell them for a profit. After they were sold, a third person would wire the money to Jang’s mother, and she would move the money into his personal bank account back in the United States.
Zang and Zhou claim they did not know that the original phones were counterfeits, and Apple had no idea they were working with counterfeits when they would bring them in, as they wouldn’t turn on.
Within the time of the scheme, Jang allegedly submitted 3,069 warranty claims and was given 1,493 replacement iPhones. Looking at an estimated $600 per phone, that means Apple lost almost $900,000 in the two men’s scam. The company sent cease-and-desist orders to Jang at Zhou’s address in June and July of 2017. The letters informed him that they knew he was importing fake iPhones. Jang never responded to these notices.
This type of thing has been done before. Last year a Chinese national living in New Jersey was accused of making $1 by smuggling fake iPhones and iPads into the U.S.
Why Did Apple Not Catch on Sooner?
It makes you wonder why Apple didn’t catch on to this sooner, at least before they lost $1 million in the process. To me it’s not so much that they were using counterfeit phones but that they were given new iPhones every time.
I’ve taken a few damaged iPhones to Apple to be fixed/replaced. I can’t see them giving me new ones to the tune of $1 million over my lifetime, let alone in whatever the time frame is for this crime. I was thoroughly questioned about how the damage happened. I think they would notice if I submitted over 3,000 warranty claims. I just do not understand why these phones were replaced repeatedly when it seems so obvious they were running a scam.
Are you shocked that these two college students were able to soak Apple for around $1 million in iPhones? What are your thoughts regarding this counterfeit iPhone repair scam? Add your thoughts into the comments below.