Apple Loses $895K in Students’ Fake iPhone Scam

The tech giant Apple has been scammed – two engineering students from China imported thousands of iPhones replicas, then convinced Apple to exchange 1,493 of them for new iPhones and sold them.

According to The Oregonian reports, Yangyang Zhou and Quan Jiang were studying engineering at Oregon State University and Linn Benton Community College on student visas. In their spare time, the two students were working on a “personal” project, importing smartphones from Hong Kong. The devices were all fake iPhones.

How did they operate?

Yangyang Zhou and Quan Jiang had a very specific technique. They sent each fake iPhone to Apple, by mail or in person, arguing that the devices were faulty and therefore they needed to be exchanged with functional ones. When Apple sent them back new, legitimate iPhones, as per its warranty process, the students would ship the new devices overseas to be sold, with a share to Jiang’s mother who would later transfer it to Jiang’s bank account.

The duo started the scam back in 2017 and it became pretty successful, so much so that it cost Apple $895,800 in new iPhones, according to the Verge.

But how did Apple allow the iPhone replicas to be replaced with legitimate ones so easily? It was pretty simple, actually. If the iPhone can’t be powered on, its authenticity cannot be verified. Another important thing to keep in mind: no proof of purchase is required for a warranty claim. Apple’s employees were just following procedure.

The two of them are now facing criminal charges. Jiang is facing charges for illegally trafficking counterfeit goods and fraud, while Zhou is accused of illegally exporting goods.