Apple was the victim of a fraud with its mobile devices that lasted almost a decade. The scheme caused the Cupertino-based company losses of more than $12.3 million.
Fraudsters brought counterfeit iPhones, iPads, and other Apple products to Apple Stores, claiming they were faulty or had a problem, and asked to replace the device with a new one. Apple Store employees would meet the customers, take the «non-working» fake iPhones and give them original devices as a replacement. Later, a brand new original smartphone or other device was sold on the market at a fairly high price. According to sources familiar with the situation, the replacement process was repeated about 16 thousand times over the years. The first cases were recorded back in 2014.
It is noted that fraudsters lured different variants of iPhone, Apple Watch, iPad, and other devices from the Apple Store. All these replacements of fake devices with original ones cost Apple more than $12.3 million.
The indictment states that the accused people (5 people) coordinated with groups in China, from where they received counterfeit devices. The whole process is more complicated than it seems, as the counterfeit iPhone models used stolen identification numbers. This made it possible to pass off returns of counterfeit iPhones as genuine ones, as Apple Store employees could not distinguish between the products.
Since the devices have genuine but stolen ID numbers, it is possible that the real owners of the devices may be deprived of AppleCare warranty repairs. That’s because Apple’s system has already processed the ID numbers and returned the devices.
To avoid tracking, the attackers demanded replacements at different Apple stores in California. In addition, the defendant also provided false information to the Apple Store, including fake addresses, aliases, etc. If found guilty, the defendants will face years in prison.
Source: wccftech