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The United States Department of Justice (DoJ) has found two Chinese nationals guilty of a sophisticated iPhone repair scam defrauding Apple of millions of dollars. The scammers would submit counterfeit iPhones to the company for repair and get genuine iPhones as replacements. They replaced more than 5,000 fake iPhones with genuine handsets between 2017 and 2019, causing Apple a loss of over $3 million.
Two Chinese men defrauded Apple of $3 million by replacing fake iPhones
According to a press release from the US Attorney’s Office for the District of Columbia, Haotian Sun, a resident of Baltimore, Maryland, and Pengfei Xue, a resident of Germantown, Maryland, both Chinese nationals aged 33, ran this scam between May 2017 and September 2019. They received counterfeit iPhones from Hong Kong at UPS mailboxes across the D.C. Metropolitan area and submitted those to Apple for repair.
The scammers spoofed serial numbers and/or IMEI numbers of the fake iPhones and likely sent the devices to Apple in a dead condition. This not only allowed them to get a free replacement under warranty but also helped avoid detection. Even if repair technicians noticed something sketchy with the parts inside, they likely approved the replacement because the serial number and IMEI number appeared genuine.
The two Chinese nationals sent fake iPhones for repair to various Apple retail stores and Apple Authorized Service Providers, including the Apple Store in Georgetown. They used various aliases during the scheme, and likely received help from other conspirators in the US and abroad. Overall, the scammers exchanged more than 5,000 dead counterfeit phones for genuine ones, defrauding the company out of over $3 million worth of iPhones.
Sun and Xue were arrested on December 5, 2019. The US Postal Inspection Service and Homeland Security Investigations investigated the case. A federal jury in the US District Court in the District of Columbia found the duo guilty of conspiracy to commit mail fraud and mail fraud. They now face a statutory maximum sentence of 20 years in prison. Sentencing on the case is scheduled for June 21, 2024.
Apple has fallen prey to similar scams in the past
This isn’t the first instance of someone tricking Apple to swap fake iPhones for real ones. The company has fallen prey to similar scams in the past. In October 2023, a sibling duo received a 41-month federal prison sentence for similarly defrauding Apple of around $6.1 million. San Diego residents Zhimin and Zhiting Liao exchanged 10,000 fake iPhones and iPads over eight years. Their spouses and eight co-conspirators also pleaded guilty.