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Smartphone Reseller Cheated Customers Out of Millions, Feds Say (arstechnica.com)

Posted by msmash on from the fraud-case dept.

An anonymous reader writes:The US Federal Trade Commission (FTC) has sued a Nevada-based company called Laptop & Desktop Repair LLC (LDR) for allegedly bilking thousands of customers out of millions of dollars in promised funds for the resale of their smartphones. LDR operated dozens of websites that promised customers high returns for their smartphones and tablets using an instant quote generator. The customers, believing that this website would pay the highest price for their used gadget, sent their phones to LDR. Once LDR received the gadget, it would offer the customer a "revised quote" that was often only three to ten percent of the original quoted price. Customers only had three to five days to dispute the revised quote, the FTC's complaint claimed. The FTC further alleged that when customers would call LDR to request their smartphones back, the company would put them on hold for extraordinarily long periods of time, the call would be dropped, and an LDR employee would say the phone had already been processed. If the customer persisted in threatening to report LDR's actions, company representatives would offer slightly higher resale prices.

40 of 66 comments (clear)

  1. Nothing New Here by Anonymous Coward · · Score: 1

    This type of thing happens all the time with different products -

    IE: http://www.cbsnews.com/news/tigerdirect-and-compusa-q38a-pc-buy-back-program/

    1. Re:Nothing New Here by houstonbofh · · Score: 3, Informative

      "Deal locally, face-to-face"
      https://www.craigslist.org/abo...
      At least they did not paw with a fake cashiers check...

    2. Re: Nothing New Here by gfxguy · · Score: 4, Insightful

      People should definitely know better, but stop blaming the victims. Just because I don't lock my front door, nobody has the right to walk in and steal my stuff.

      --
      Stupid sexy Flanders.
    3. Re: Nothing New Here by gfxguy · · Score: 2

      But the blame still falls on the perpetrator, not the victim. If assholes didn't exist, people wouldn't have to be so cynical. The fault in that lies with the assholes.

      --
      Stupid sexy Flanders.
    4. Re: Nothing New Here by Guybrush_T · · Score: 2

      Weak people should be beaten because they're too weak to fight back, those with bad vision should die if they don't see a car coming, ... what utter bullshit.

      The reason why there are laws is because unlike you, the society recognizes that everybody has strength and weaknesses and that weaknesses should not be a reason for being abused.

      You seem to be smart enough to not fall into this trap, but you're an utter idiot when it comes to living with others. No one is perfect.

      You seem like the kind of person that advocates for remembering 12 characters random passwords and think anyone who is not capable of that should deserve to be hacked. That gives you a feeling of superiority and must surely feel good, because it tends to rank human on a scale that favors you, and hides all of your weaknesses that others may not have.

      I think the society should promote nice, helpful, friendly (though maybe naive) persons against those who take advantage of others weaknesses for their personal gain and ego (just like you).

    5. Re: Nothing New Here by geekmux · · Score: 2

      Weak people should be beaten because they're too weak to fight back, those with bad vision should die if they don't see a car coming, ... what utter bullshit.

      The reason why there are laws is because unlike you, the society recognizes that everybody has strength and weaknesses and that weaknesses should not be a reason for being abused.

      You seem to be smart enough to not fall into this trap, but you're an utter idiot when it comes to living with others. No one is perfect.

      You seem like the kind of person that advocates for remembering 12 characters random passwords and think anyone who is not capable of that should deserve to be hacked. That gives you a feeling of superiority and must surely feel good, because it tends to rank human on a scale that favors you, and hides all of your weaknesses that others may not have.

      I think the society should promote nice, helpful, friendly (though maybe naive) persons against those who take advantage of others weaknesses for their personal gain and ego (just like you).

      There have always been two teachers in life; wisdom and experience.

      As far as your "bullshit" examples go, realize that we promote self-defense for the weak, and promote corrective lenses for those with bad vision. The burden to educate and improve our society does not solely lie with lawmakers to address weaknesses.

      I also believe in root cause analysis to prevent or deter future criminal activity. Yes, we should have laws that deter criminal activity, but in order to eliminate the ability for the crime to exist and flourish, we need to promote an educated society, not just one that is merely helpful and friendly. And there are two teachers for that. As any parent can attest, sometimes the hard way is the only way.

      Society foots the bill when ignorance is abused, so addressing root cause will reward all.

    6. Re: Nothing New Here by gfxguy · · Score: 1

      The point isn't that people aren't stupid for leaving their door unlocked, it's that the world is a shit hole because of the criminals, not the victims. The blame should always go first to the ones violating the rights of others, and lesson learned for the victims who made it easy.

      --
      Stupid sexy Flanders.
    7. Re: Nothing New Here by Guybrush_T · · Score: 1

      That seems much more reasonable.

  2. Russian owned by Anonymous Coward · · Score: 1

    LDR, owned by Vadim Olegovich Kruchinin.

    Sad, this guy is giving Russians a bad name.

    1. Re:Russian owned by silentcoder · · Score: 2

      To be fair... it looks like a couple of Russians (his parents) gave him a pretty bad name first..

      --
      Unicode killed the ASCII-art *
  3. Yet another civil case.. by dcooper_db9 · · Score: 5, Insightful

    When an individual steals it's prosecuted as a crime. Stealing a candy bar can get the thief a year or more in jail. When someone forms a company and conspires to steal it's treated as a civil matter. The proprietors shouldn't be in court, they should be in prison.

    --
    I do not block ads. I do block third party scripts.
    1. Re:Yet another civil case.. by Maritz · · Score: 1

      Take it easy, Obama.

      Baby Bush oversaw a hell of a lot more scaling back of due process than Obama. But I bet you don't see it that way.

      --
      I do not want your cheap brainburning drugs. They are useless for work. And I am a working man today.
    2. Re:Yet another civil case.. by known_coward_69 · · Score: 1

      that's because there will always be idiots who will do business with sketchy companies that promise big money and no one had ever heard of that company before

    3. Re:Yet another civil case.. by The-Ixian · · Score: 3, Funny

      No, see, this is just smart business. I think that the CEO of this company should run for office...

      --
      My eyes reflect the stars and a smile lights up my face.
    4. Re:Yet another civil case.. by houstonbofh · · Score: 2

      Take it easy, Obama.

      Baby Bush oversaw a hell of a lot more scaling back of due process than Obama. But I bet you don't see it that way.

      So it is OK to rob you if you have been robbed before?

    5. Re:Yet another civil case.. by ausekilis · · Score: 1

      I don't think this can really be called theft, since those selling their phones and tablets did receive money in exchange. This is more of a bait-n-switch scheme done by a business. Businesses don't end up in prison, people do... and as others have said, businesses exist to shield people.

      Like the bumper sticker says: "I'll believe corporations are people when Texas executes one."

    6. Re:Yet another civil case.. by Jawnn · · Score: 3, Informative

      Take it easy, Obama.

      Baby Bush oversaw a hell of a lot more scaling back of due process than Obama. But I bet you don't see it that way.

      So it is OK to rob you if you have been robbed before?

      No, but if I unilaterally call you an "enemy combatant", I can do whatever the fuck I want to you.

    7. Re:Yet another civil case.. by silentcoder · · Score: 2

      At the very least this is fraud. If an individual does this they will be charged with fraud and looking at 10 years minimum. Conmen who get caught *do* go to jail... but concompanies - they just get a lawsuit and a fine.

      Limited liability should be scrapped as simple matter of justice - it flat out makes a joke out of the idea of equal-before-the-law.

      --
      Unicode killed the ASCII-art *
  4. Sounds like "mail us your gold" by xxxJonBoyxxx · · Score: 2

    Sounds like the old "mail us your gold - we'll send you a check" scam.

  5. Ideal targets by ghoul · · Score: 3, Insightful

    They did pick a uniquely gullible demographic- People who spend hundreds of dollars on a new phone when they have a working smartphone. These people have proven through their actions that they are unable to make good financial decisions. Good business plan. Learning from the best- Jobs,Cook et al

    --
    **Life is too short to be serious**
    1. Re:Ideal targets by Anonymous Coward · · Score: 1

      Wait, you are saying I should hoard cash and not spend it on products? I thought that everyone agreed that it bad for the economy? If I have disposable income to buy a new device and want a new device (and am properly saving for the future, 401k, etc.) - then why should I consider it a bad financial decision to spend some money? Again, it is good for the economy to spend money and bad to just hoard it in the bank. Granted, not everyone can afford a new device and probably should think hard about it. But for those that can - it is not necessarily a bad decision.

    2. Re:Ideal targets by houstonbofh · · Score: 1

      My pristine device was suddenly not so pristine and the valuation dropped to a fraction of the amount. The device I got back was covered in scratches; I assume they accidentally mixed it up and someone else made out on the deal, but I have refused to deal with such services for as long as I can as a result.

      You did not record the serial number? This would be very easy to prove fraud and they would have to pay you the original quote.

    3. Re:Ideal targets by cdrudge · · Score: 1, Informative

      So no one ever upgrades phones because they want a different screen size, or more storage, faster processor, or a feature their currently functional phone doesn't have? It's ALWAYS just about having the latest as sign of status, right? Never a legitimate need to upgrade.

    4. Re:Ideal targets by Anonymous Coward · · Score: 1

      Not all parts have serial numbers. I've encountered places which will happily strip the screen and back off a pristine device, replace it with something heavily scuffed, and if the customer claims it that isn't their phone, the merchant just shows the IMEI number and tells the customer to scram or deal with the cops. I've seen this in many places, be it jewelry shops that change the stone out, and so on. This is also a classic eBay scam as well. Send a customer a perfectly good 128 GB iPhone, they dispute the charge and return you back a half-destroyed 8GB iPhone 5, claiming that is what you shipped them.

    5. Re:Ideal targets by ghoul · · Score: 1

      Just because you can afford it doesnt mean you should buy it if you dont need it. Thats just useless consumption and creating more ewaste and pollution. Just because a phone does not pollute doesnt mean the factory building it doesnt. It would be different if your phone is 3+ years old and updates are not coming and latest software is not working on it. But in that case the phone would anyway not have resale value. These places are based on the premise that the phone is good enough to use and can be resold . If its good enough to be resold its good enough to be used till you really need a replacement.

      --
      **Life is too short to be serious**
  6. Solution going forward by JoeyRox · · Score: 2

    I'm sure another scummy phone trade-in company will rise up in its place (they also do), so I propose customers send their phones in account-locked; iPhone = Find My Phone active, Android = Gmail account active. Even locked the company will still be able to evaluate the phone's physical condition along with seeing the LCD on and manipulating the touchscreen. Once you're given an agreeable quote and have been paid you can then remotely unlock the phone to complete the sale.

    1. Re:Solution going forward by gigne · · Score: 2

      Does this sort of lock prevent re-flashing or factory reset? I'm genuinely interested!

      --
      Signature v3.0, now with 42% less memory usage.
    2. Re:Solution going forward by JoeyRox · · Score: 1

      It doesn't prevent a factory reset but after a reset has been performed the original iCloud / Gmail account remains associated with the phone. The credentials for that account must then be entered before phone can be used after the reset.

    3. Re:Solution going forward by houstonbofh · · Score: 1

      Or just deal in person. Lots of local places buy used phones. They may not "offer" as much as the scam joints, but you actually see the cash.

    4. Re:Solution going forward by clonehappy · · Score: 1

      Even non-scum phone trade-in companies won't be giving you a dime if you send them an iCloud-locked iPhone or FRP-locked Android. How do they get any guarantee you'll actually (or are actually able to/authorized to) unlock the phone after you get paid?

      This would be ripe for abuse, since a criminal could just sell the company stolen phones all day long, get the money, then bail. Any company that wants to stay in business could never operate this way, because the chances of the phones ever being unlocked is slim to none.

    5. Re:Solution going forward by JoeyRox · · Score: 1

      The company could require the user to reply to an email sent on the same email account active on the phone. That will address your second concern about users sending in stolen phones. As for assuring whether authorized users will actually unlock the phone after receiving payment, they company could either use Paypal with specific terms about cancelling transactions for owners who fail to unlock the phone (ebay always sides with the payer in disputes anyway) or they could use an escrow service.

  7. Federal thresholds for action. by geekmux · · Score: 2

    From TFA:

    "The FTC said it has received more than 4,000 complaints from customers about LDR websites since 2011."

    For organizations like the FTC and BBB, what exactly is the damn threshold for these kinds of regulatory agencies to stop sitting on their asses taking complaints and instead take action?

    No wonder Wells Fargo was able to get away with their damn scam for years. Why even bother with anti-corruption policies in business when it's become the fucking status quo at the Federal level.

    1. Re:Federal thresholds for action. by ADRA · · Score: 1

      BBB is a rating agency. I don't think they have any actual teeth. As for FTC, sure they should've seen a pattern of abuse a lot sooner and taken 'some' action to relegate it. Even a stiff warning can be enough to revise some companys' policies, but certainly a cash penalty is best.

      --
      Bye!
    2. Re:Federal thresholds for action. by epine · · Score: 1

      BBB is a rating agency. I don't think they have any actual teeth.

      You do know that most social media sites since the paleolithic era manage reputation differently than displaying your elite 5-digit UID on every post?

      Bear in mind that almost all blackmail is reputational blackmail (as someone running exclusively on ZFS with automatic snapshots, I can still claim this to be true).

  8. Re:If no one goes to prison by houstonbofh · · Score: 1

    Make sure you have a web of Limited Liability Corporations too... Gotta be able to keep the money.

  9. Weak Sauce by ThatsNotPudding · · Score: 1

    You don't 'fine' scum like this: you. part. them. out.

  10. Re:Apparently 4,000 for FTC. For BBB, 1 by Gilgaron · · Score: 1

    Yes, although I believe the BBB will occasionally notify the Attorney General of the resident state in some circumstances. I may be mistaken.

  11. Yep, BETTER Business Bureau, not law enforcement by raymorris · · Score: 1

    That's correct. A BBB, as the name suggests, works to improve business in their area. They are not law enforcement. Criminals are not their area, better businesses areb

  12. Reminds me by ArylAkamov · · Score: 1

    There used to be a few services like this that would advertise on television, and had an online quote generator.

    This was back when the original i7 processors were new, so I gave them my build to see how much they would offer.

    For a new i7 920, 16gb ram, 500gb HDD and whatever the higher-end video cards were at the time, they offered $200.

  13. With Appologies to Joe... by mjwx · · Score: 1

    When you steal from one it is a theft, when you steal from a million it is a business.

    --
    Calling someone a "hater" only means you can not rationally rebut their argument.