According to the federal government, two college students from Oregon was able to scam Apple allegedly out of almost $900,000 through a scheme that involved counterfeit iPhones.
the government claims that the scam involved counterfeit Apple iPhones that were shipped to students Yangyang Zhou and Quan Jiang from “an associate” in China. Zhou and Jiang would allegedly take the fake iPhones to Apple for repair under the warranty program of the company and in many cases, Apple would send them authentic iPhones as replacements. According to complaints that were filed by the federal government in March 2018 and March 2019, the pair was able to submit thousands of warranty claims for fake iPhones through the end of 2017.
Jiang was reportedly a student at Oregon State University at the time. The government disclosed that it is estimated that he submitted more than 2,000 warranty claims in 2017 alone, and the records of Apple reveal that more than 3,000 claims in total were attributed to Jiang. According to the government, Jiang insisted that the iPhones could not be turned on in every case, which turned out to be the crux of the scam.
In its complaint, the government wrote: “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.” It also said the company will usually have to send a replacement iPhone under its warranty policy.
While Apple was able to discover that many of the counterfeit iPhones that Jiang submitted were not authentic, the firm still accepted 1,493 of the phones that the student sent in as authentic and provided him with replacement iPhones. According to the estimates of the company, the government said that at an estimated cost of $600 per iPhone, the replacements resulted in losses of $895,800 for the tech giant.
Apple did not immediately respond to requests for comment regarding the matter.
Jiang informed authorities that he would regularly receive packages with 20 to 30 iPhones from “an associate” in China with instructions to submit them to Apple under warranty claims. After receiving the replacement iPhones, Jiang would then ship them back to China, where they could be sold. The unnamed “associate” would then pay a portion of the profits to the mother of Jiang in China, who would deposit the funds into a bank account that Jiang would be able to access from the United States.
In 2018, federal agents searched the Oregon home of Jiang and discovered more than 300 counterfeit iPhones, along with shipping records and some documents for warranty claim submissions. They also discovered several boxes that had been addressed to Zhou, who has been named as the accomplice of Jiang.
According to The Oregonian, Zhou was an engineering student at Linn Benton Community College last spring.