Chinese man pleads guilty of defrauding Apple out of 1,500 iPhones

“Over the span of two years, a Chinese national in Oregon sent devices that looked like iPhones to Apple, saying they wouldn’t turn on and should be replaced under warranty,” Andrew Selsky reports for The Associated Press. “He didn’t just submit a couple of the devices — he delivered in person or shipped to Apple around 3,000 of them. Apple responded by sending almost 1,500 replacement iPhones, each with an approximate resale value of $600. But the devices that Quan Jiang sent Apple were fake.”

“Jiang, 30, a former engineering student at a community college in Albany, Oregon, pleaded guilty in federal court Wednesday to trafficking in counterfeit goods, the U.S. Attorney’s office in Portland announced,” Selsky reports.

“Apple rejected 1,576 warranty claims associated with Jiang, Duffy said. The 1,493 claims that resulted in replacement iPhones being delivered by Apple represented an $895,000 loss to the Cupertino, California-based company, Duffy wrote,” Selsky reports. “Jiang faces a maximum sentence of 10 years in prison, a $2 million fine or twice his proceeds, whichever is greater, when he is sentenced on Aug. 28. Under a plea agreement, the U.S. Attorney’s office will recommend a prison sentence of three years, at least $200,000 in restitution to Apple.”

Read more in the full article here.

MacDailyNews Take: Apple’s ability to identify real iPhones from counterfeits, regardless of whether they power on or not needs some tweaking.

Selsky reports: An Apple official quoted by Homeland Security Investigations Special Agent Thomas Duffy in a court document exposed a vulnerability that Jiang exploited. “Submission of an iPhone that will not power on is critical to perpetuating iPhone warranty fraud, as the phone will not be able to be immediately examined or repaired by Apple technicians, triggering the Apple iPhone replacement process as part of its product warranty policy,” Duffy wrote, quoting Apple brand protection representative Adrian Punderson.

Related articles:
Feds bust $900,000 iPhone repair & return scam in Oregon – April 4, 2019

4 Comments

  1. Apple values customer satisfaction over the risk of fraud. Apple does not want to leave a customer without a fully functional iPhone, so it rapidly ships a replacement. Personally, I appreciate the focus on the consumer. Can you imagine the backlash if Apple delayed shipping iPhone replacements?

    Going forward, it would probably make sense for Apple to x-ray returned devices to verify that they contain the standard iPhone guts. That verification would then trigger the replacement process.

Add Your Feedback

This site uses Akismet to reduce spam. Learn how your comment data is processed.