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How Two Engineering Students Cleverly Scammed $900,000 From Apple Using $30 Fake iPhones



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Apr 07 2019
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Apple may be one of the richest companies on the planet, and US$900,000 is just a drop in the ocean for the iPhone maker, considering it has an eye-popping US$44 billion cash on hand. However, when such a giant is scammed, it’s no longer about money but rather the tarnished reputation. How on earth could a US$900 billion company lost close to a million bucks to some scammers?

 

Apparently, two Chinese engineering students in Oregon have been scamming Apple since 2017, until they were caught recently. Here’s how the scam works. Quan Jiang and Yangyang Zhou, both foreign students on U.S. visas, would receive shipments of fake iPhones from “an associate” in China, as revealed by the federal government.

 

Both students would then send the fake iPhones to Apple for repair under the company’s warranty program. Apple, thanks to its return policy, would more often than not send them authentic iPhones as replacements. It was quite a clever tactic because the students claimed that the Apple iPhones refused to power up.

Students Scam Apple Of 900 Thousand Dollars - Fake iPhone

An iPhone that will not power up is considered a critical problem. And since the phone could not be powered up for immediate inspection, Apple technicians would not be able to tell the seriousness of the issue, let alone repair it instantly. Hence, the company will often have to send a replacement iPhone under its warranty policy, without realising the faulty phone was a fake one.

 

In total, Mr. Jiang admitted that he had sent some 3,069 warranty claims, and submitted over 2,000 iPhones to Apple in 2017 alone. Apple records showed that while they managed to detect over 1,500 iPhone which were not authentic, the company still accepted 1,493 of the warranty claims for replacement because the fake phones were too real to be noticed immediately.

 

At a cost of US$600 per new iPhone, the replacement for the 1,493 phones would result in losses of US$895,800 for Apple. Not bad for a fake iPhone, which cost about US$30 each. Jiang, who is completing studies in electrical engineering at Linn Benton Community College, told authorities that he regularly received packages with 20 to 30 iPhones from “an associate” in China.

China Fake iPhone Industry

The packages would include instructions to submit the phones to Apple under warranty claims. After receiving the replacement, Jiang would ship them back to China, where they could be sold as brand new genuine iPhones. The unknown “associate” would pay a portion of the profits to Jiang’s mother in China, who would deposit the funds into a bank account that Jiang could access from the US.

 

Meanwhile, Mr. Zhou, who has just completed his engineering degree at Oregon State University, managed to scam Apple of over 200 iPhones using the same tactic, as revealed in a government document filed in March 2019. Customs officials said they located more than 300 phones at Zhou’s home. Both Jiang and Zhou reportedly shared the same home address.

 

According to federal papers, both Jiang and Zhou claim they didn’t know the original phones were counterfeits. A Homeland Security agent said that the scheme worked primarily because Apple Store employees couldn’t verify the authenticity of the devices since they would not power on. To make matters worse, Apple didn’t require proof of purchase to replace the phones.

Students Scam Apple iPhone - Boxes of Fake iPhone Found at Home

However, when Apple realised that Jiang was importing fake iPhones at massive scale, the company had sent him cease-and-desist orders in June and July 2017, to which the student simply ignored. In fact, Mr. Jiang denies receiving any of these letters or being told that what he was doing was illegal, obviously playing innocence and ignorance cards.

 

Jiang has been charged with trafficking counterfeit goods and wire fraud. His partner-in-crime Zhou, on the other hand, is facing charges for submitting false or misleading information on an export declaration. If convicted, Jiang could be fined up to US$2 million and 10 years in prison for the trafficking accusation, and another possible 20 years in prison for wire fraud.

 

Zhou’s lawyer, Jamie Kilberg, has claimed that Jiang was the mastermind while arguing his client is innocent. The attorney said – “With respect to Mr. Zhou, the government has the case completely wrong. Mr. Zhou had no knowledge of any alleged counterfeiting scheme, and when the actual facts come out, we are confident he will be vindicated.”

Apple Store - China

 

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Comments

That’s to using the brain, both the scammers and those who see through them.

Better than being perpetually brain dead and looking half dead under the coconut trees.

Malaysia needs people who think like scammers (“legit” business is often nothing more than scamming), and those who can catch out scammers.

Malaysians are scammed by their politicians all the time – and they seem to love it, just look at the way they participate in the obvious kampong scams hatched by the politicians.

The Malaysian caveman mentality may be explained by what a huge (mostly illegal, tax-dodging) and thriving industry the multitude of Ponzis, pyramid (“MLM”), scams, cons, etc etc is in a nation of the dumb, the delusional, the gullible, the brain-lazy, the no-brain.

Take a walk if you are not too lazy, you will also see the number of stores selling “magic cures” for all the ills and more of the world. Untested and even banned “cures” are more than available all over the place – like the multitude of “remedies” available to make faces more “attractive”, the obese skinny, and, of course, those who are traumatised by their dark skin colour” into fcuking Angmohs!

I walked into a store to get a laptop, even before half way of her doing her sales spiel, the shop assistant took out a “foetus” product and some lavish brochures, and told me about the magic of rejuvenation, everlasting life, everlasting beauty.

Unlike paranoid, neurotic, psychotic, anxious, low confidence, insecure, kiasu, kiasi dumb gullible moronic Malaysians, I have no interest at all in giving any time for all the “nice things” offered to Malaysians that no one elsewhere in the world wants to give any time to!

Elsewhere in the world, the gomen would jump on the purveyors of those funny products and purveyors of deception in no time!

Malaysians may genuinely deserve the conman scamming lying utterly dishonest political frauds sent by the Almighty specially for them.

I think the Almighty sent the devils to teach lessons and make Malaysian learn the obvious.

Malaysians prefer to stay moronic, and those who care, prefer to buy degrees from fake outfits, and participate in the scams.

Malaysia is “G*d’s gift” to our political scammers and conmen.

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