Apple’s iPhone is considered to be one of the best smartphones in the business. And that’s exactly why it’s one of the most popular properties on planet Earth. However, that kind of popularity also attracts criminal elements who want to chip away at their profits. This time they came in the form of two Oregon-based engineering students from China.
According to Oregon Live, Yangyang Zhou and Quan Jiang were found guilty of trafficking counterfeit Apple iPhones that cost the company hundreds of thousands of dollars.
The investigation of this racket began in April 2017 after US Customs and Border Protection seized about 5 counterfeit Apple iPhone shipments from Hong Kong. In December 2017, Jiang was identified as one of the alleged importers of the counterfeit phones.
Jiang explained how the racket worked. He told the investigators that an associate in China sent him 20 to 30 iPhones. Then he submitted the iPhones (which didn’t work) to Apple for repair under Apple’s warranty program. And once Apple replaced them, he shipped them back to China. Sometimes he did the warranty claim in person and other times he did it through Apple’s online service support.
In 2017, Jiang submitted around 2000 iPhones to Apple for warranty repair. Apple replaced 1493 of those phones and rejected the rest.
According to company policy, if a phone is found to be counterfeit or altered in an unauthorized manner, Apple will reject the warranty claim and ship it back with an explanation. But since they couldn’t immediately examine or repair phones that won’t power on, Apple ended up losing around Rs 6 crore ($895,800).
Jiang was associated by name, email, IP address to 3069 iPhone warranty claims. He also paid his friends and relatives to receive shipments of phones from China. However, it all came to a stop when Apple’s legal counsel sent a cease-and-desist order to Jiang. About 300 counterfeit iPhones were found in Jiang’s residence and 95 that were addressed to Zhou. Investigators found 200 iPhone warranty claims in Zhou’s name.
As of now Jiang, who’s accused of trafficking counterfeit goods and wire fraud, remains out of custody on GPS monitoring. On the other hand, Zhou, who is accused of submitting false or misleading info, is out of custody and his lawyer believes that he won’t be vindicated.