How two engineering students scammed Rs. 6cr out of Apple
Two engineering students hailing from China have scammed more than Rs. 6 crore out of Apple. The duo brought thousands of fake iPhone units into the US and placed several replace/repair requests with the Cupertino giant. Of these requests, many were approved, giving them a chance to sell the real (replaced) units at profit and split the money. Here are the details.
How they exploited Apple's return policy
Yangyang Zhou and Quan Jiang exploited Apple's return policy by importing thousands of fake iPhones into the US, The Oregonian reported. Zhou took care of importing the shipments, while Jiang received the packages and placed separate online/offline return requests, claiming that the units were in warranty and did not power on. And, apparently, Apple approved many of their requests without seeing proof of purchase.
Over 3,000 warranty claims requested
According to the complaint filed, Jiang, who studied at Linn Benton Community College, placed as many as 3,069 requests for return/replacement with Apple and received some 1,493 fresh replacement units from the company.
In all, they scammed nearly $900,000 out of Apple
The brand new replacement units were then illegally shipped back to China by Zhou, where they were sold at a higher price. So, the duo not only made the estimated $600 per iPhone but also generated profit over it. In all, the complaint alleges, they have scammed Apple for an estimated $895,800, which is well above Rs. 6.2 crore.
Money generated was illegally wired
Subsequently, from the money generated by the sale of real iPhones in China, a third-party would transfer Jiang's share to his mother. She would then wire the funds to an account he had been using in the US.
Interestingly, both students claim they didn't know iPhones were fake
As of now, both students remain out of jail but face criminal charges. Jiang has been accused of committing wire fraud and trafficking fake products and could be fined with $2,000,000 or get 10 years in prison. Meanwhile, Zhou has been accused of illegally exporting products, which could mean fines up to $10,000, or five years in prison, or both.
No comment from Apple yet
Apple has not commented on how its executives fell for this scam and issued nearly 1,500 units. However, the case still looks pretty bad for the students as the investigators have already got a lot of evidence against them, including fake iPhones seized from their residences and mailboxes. Even Apple's own records show that 16 returns alone were addressed to Zhou.
