Published: Sun, April 07, 2019
Electronics | By Kelly Massey

Chinese college students duped Apple out of $1 mn

Chinese college students duped Apple out of $1 mn

That suggests that in order for the scam to work, Jiang and Zhou had to have access to authentic iPhone serial or International Mobile Equipment Identity numbers, also called IMEI numbers, that would indicate the devices were still covered by the fix warranty.

In all, the company estimates the scheme bilked Apple out of $895,800.

The duo allegedly started since the beginning of 2017 to smuggle thousands of fake iPhones into the U.S. from China. When the real iPhones were sent to China, an associate paid Jiang's mother, who then sent the money to his account.

After exploiting Apple's return policy, there contact in China would sell the original iPhones at the standard price and they would get they cut from the same.

Apple told investigators that 1,493 warranty claims linked to Jiang and/or Zhou were processed and replacement devices were issued at loss of $600 per iPhone, according to a "brand protection specialist" who spoke with a Homeland Security special agent.

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It's not clear if the fraud alert came within Apple, or the port authorities that have been investigating suspicious bulk iPhone shipments from China since the spring of 2017 but in any case, the scheme started falling apart for the two Chinese on an engineering student visa. Apple's return policy replaces any iPhone in warranty if found to be faulty, which turned out to be an opportunity for making some quick cash for two engineering students.

In 2018, federal agents searched the OR home of Jiang and discovered more than 300 counterfeit iPhones, along with shipping records and some documents for warranty claim submissions.

They were apparently rumbled when customs officers seized suspicious shipments bearing the Apple logo, the documents noted. The government disclosed that it is estimated that he submitted more than 2,000 warranty claims in 2017 alone, and the records of Apple reveal that more than 3,000 claims in total were attributed to Jiang.

According to The Oregonian, Zhou was an engineering student at Linn Benton Community College last spring. He was put in federal custody but was later released on Global Positioning System monitoring. Jiang is being charged for committing wire fraud and trafficking fake iPhones.

Apple had sent a cease-and-desist notices at Jiang's address, however, he claims that he never received any notification from the company stating that the iPhone returned by him were counterfeit.

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