“Matthew Shaer’s piece in the current issue of Wired about the Secret World of Stolen Smartphones covers all kinds of theft — from subway ‘Apple picking’ to warehouse smash-and-grabs,” Philip Elmer-DeWitt reports for Fortune. “But he leads with a provocative anecdote…”
“The story starts with a FedEx package that broke open in Rancho Cordova, Calif., revealing 37 shrink-wrapped iPhones. Police took the serial numbers, taped the package back up, and waited to see where it went,” P.E.D. reports. “It led them, according to Shaer, to a middleman named Wasif Shamshad, a pair of Chinese-Americans — Shou Lin Wen, and his wife, Yuting Tan — and a larger shipment of 190 iPhones addressed to an apartment in Hong Kong.”
A picture slowly emerged of a so-called credit-mule scheme, ingenious in its simplicity and impressive in its reach. Middlemen such as Shamshad were dispatched to seemingly random American cities, where they trolled homeless shelters and halfway houses, offering $100 to anyone who would buy, on their behalf, a few on-contract phones from a local electronics store.
Back in California, the contraband was handed off to Wen and Tan, who arranged to have the phones shipped to their contacts in Asia. The profit margin was enormous: In North America, wireless carriers typically subsidize the cost of our smartphones in order to lure us into multiyear voice and data contracts. To obtain a phone, in other words, we fork over a small fraction of the device’s actual market worth. Wen and Tan took advantage of the system by obtaining iPhones — through middlemen and mules — for $200 a pop, then selling them in China for close to $1,000. – Matthew Shaer
“I’d always assumed that the long lines of Asians camped outside New York’s Apple stores were involved in some kind of arbitrage, making a bit of spending money on the difference between the U.S. price of an iPhone and what rich buyers in China are willing to pay. That’s a legitimate business,” P.E.D. reports. “What Shaer describes is fraud.”
Read more in the full article here.
MacDailyNews Take: As we asked back in September:
Perhaps the lottery system that Apple employs in China to discourage scalpers should to be placed in effect worldwide?
And, how are people in homeless shelters and halfway houses able to pass the credit checks? Perhaps the checks are far too lax (if they even actually exist at all)? The carriers, we assume, are ultimately responsible for approving people’s credit here, not Apple. If so, the carriers have work to do. And, if these mules do have acceptable credit scores at the outset, what do their scores look like after they default on their iPhone contract? Can they get in line next year, too, and ruin yet another launch day for Apple’s loyal customers who actually want an iPhone instead of dumping it into some guy’s shopping bag around the corner for a quick, fraudulent profit?
Did those grandmothers who only spoke Chinese, knitting for hours in a group near the front of the Apple Store line on launch day, really understand what they were buying, doing and signing? We only ask because they had zero understanding of English insofar as us asking them which iPhone model they wanted, how long they’d been in line, etc. and stared blankly at Apple Store employees and security staff instructing them to “move back,” “stay within the ropes,” and such.
How, exactly, did Apple Store staffers explain to these people what they were signing/agreeing to before they let them waltz out of the store with their max allotment of iPhones bound directly for the black market? Obviously, those carrier-subsidized sales should have never been made – and, furthermore, those fraudulent sales should be subtracted from Apple’s “10 million unit launch weekend” (or at least asterisked).
Apple, your “system” is broken. Your stated mission is to delight your customers. As our email inbox can attest, your most loyal customers were most certainly not delighted as they made special effort to stand in your queues for hours, even days, only to watch you serve thousands of credit-mule fraudsters ahead of them, leaving them empty-handed while funneling millions of dollars to criminals.
[Thanks to MacDailyNews Reader “Dan K.” for the heads up.]
Chinese scalpers and publicity seekers replace Apple fans in iPhone 6 queues – September 20, 2014
Cupertino, we have a problem: iPhone 6 lines and the Chinese mafia – September 20, 2014
Apple controls Chinese scalpers with lottery; online iPhone 4S sales resume – February 3, 2012
Apple combats Hong Kong scalpers with new iPhone reservations lottery system – January 30, 2012
Apple suspends iPhone 4S sales in mainland China retail stores – January 13, 2012
Beijing’s iPhone 4S turmoil a lesson to Apple, say analysts – January 13, 2012
Beijing Apple Store pelted with eggs after iPhone 4S sales canceled due to scalper fights – January 12, 2012
Huge throng of red cap scalpers crushes Shanghai Apple Store for iPhone 4S launch (with photo) – January 12, 2012
Hong Kong scalpers buy up iPhone 4S and resell them for big profit outside Apple Store (with video) – November 12, 2011
Police, scalpers, and customers clash in iPhone 4S queues at Hong Kong Apple Store – November 10, 2011
iPad 2, white iPhone 4 sparks scuffle outside Beijing Apple Store – May 9, 2011
Apple takes steps to curb rampant iPhone 4 scalping in China – October 11, 2010
Apple shuts flagship Beijing store as scalpers sap store’s iPhone 4 supply – September 30, 2010