Two Chinese Students Exploited Apple's Return Policy To Scam Them For Rs 6.2 Crore In The USA

Two Chinese engineering students in Oregon are now facing charges for stealing hundreds of thousands of dollars from Apple.

They didn't rob one of the company's stores or warehouses though, they just scammed Apple using its return policy and counterfeit devices.

Reuters

Starting in 2017, the two men allegedly smuggled thousands of iPhone knockoffs into the US from China. They then began sending the devices in to Apple care centres for repairs or replacements, claiming the devices wouldn't boot up. In most cases, it seems Apple replaced the devices with real iPhones.

This little scam cost the company an estimated $895,800 or about Rs 6.2 crore.

According to police reports Yangyang Zhou, an engineering graduate from Oregon State University, was responsible for smuggling the counterfeit iPhones into the US and sending the real ones the duo got as replacements back to China. His accomplice Quan Jiang, an engineering student at Linn Benton Community College, would coordinate with Zhou to bring the fake devices to Apple for replacement, either online or in person. After the real devices went back to China, a third party would wire money to Jiang's mother on the mainland, who deposited it into a US account for her son.

The two are now facing criminal charges of fraud in federal court.

Reports indicate both Zhou and Jiang claim they didn't know the devices they were getting replaced were counterfeits. In fact, authorities indicate their scam worked so well for so long because Apple Store employees couldn't identify the devices were fake, given that they wouldn't power on. Either way though, the duo received replacements, because they claimed the devices were under warranty. A major loophole that allowed them to succeed was that Apple didn't require a proof of purchase to issue a replacement.

Reuters

All told, it seems Jiang submitted 3,096 warranty claims, of which Apple granted 1,493 iPhone replacements. At an estimated value of $600 per phone, Apple lost close to $900,000. The scam was only discovered in June 2017, after which Apple sent a cease-and-desist order to Zhou's address, notifying Jiang that they knew he was importing fake devices.

It's not the first time an average Joe has tried and succeeded in scamming a major tech company. Just last month, a Lithuanian man pled guilty to stealing a total of $122 million from Google and Facebook. His scam was even ballsier, consisting of just sending the companies invoices for stuff they'd never ordered.