According to a report in The Oregonian, the scam initially started in 2017 when the two Chinese engineering students – Yangyang Zhou and Quan Jiang – began smuggling counterfeit copies of iPhones into the United States from China. They would then send these fake iPhones to Apple for repair or replacement, saying that their devices were not switching on. The Cupertino-based company, that is known for its after-sales service, in many instances replaced the fake iPhones with real ones. According to the report, the collective cost of the iPhones that were replaced is $895,800. On converting it, this becomes approximately Rs 6,20,17,129.
Zhou and Jiang then shipped the real iPhones back to China. Reports also allege that Jiang submitted 3,069 warranty claims and among these, Apple granted 1,493 replacement iPhones. This resulted in the company losing out on approximately $900,000, which is roughly Rs 6,23,07,900. We don’t know which among the two values is correct, but in either case, Apple lost out on a big amount because of the scam. However, both the Chinese students are now claiming that they were not aware of the fact that iPhones were fake, according to Federal complaints. It has also been reported that the two worked together as a team. While Zhou is accused of illegally exporting the fake iPhones, Jiang has charges of illegally trafficking copied goods and committing wire fraud against himself. We should mention that currently, both the accused students are not in custody, Jiang is being monitored by GPS. The reason for the fraud was explained by a Homeland Security agent who said that the only reason that the scheme by the two students could work is because the employees at Apple Store could not verify the authenticity of the iPhones since they did not switch on. However, they went by the regular procedure that they follow and started with the replacement process. Last year, another Chinese person who was staying in New Jersey on a student via pleaded guilty for selling fake iPhones and iPads. The Chinese national reportedly pocketed $1.1 million in sales by the scam.
