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Apple Said To Have 'Dramatically Reduced' Multi-Billion-Dollar iPhone Repair Fraud in China (macrumors.com)

Posted by msmash on from the closer-look dept.

From a report: Within the past four years, Apple has managed to "dramatically reduce" the rate of iPhone-related repair fraud in its retail stores in China, according to The Information's Wayne Ma. The report is based on interviews with more than a dozen former Apple employees who spoke on condition of anonymity. In 2013, Apple is said to have discovered a highly sophisticated fraud scheme in which organized thieves would buy or steal iPhones, remove valuable components like the processor or logic board, swap in fake components, and return the "broken" iPhones to receive replacements they could resell. From the report: "Thieves would stand outside stores with suitcases full of iPhones with some of the original components stripped out and replaced with inferior parts, two of the people said. The fraudsters would hire people to pretend to be customers to return them, each taking a device to stand in line at the Genius Bar, the people said. Once the phones were swapped, the actors would pass the new phones to the fraudsters and get paid for their time, the people said."

10 of 87 comments (clear)

  1. No wonder!!! by sentiblue · · Score: 4, Insightful

    So for a long time I kinda didn't like how Apple would disable iPhones because they were not repaired by authorized dealers or by Apple itself. I thought Apple was trying to monopolize the repair works to itself... Now that I read this article, I see what kind of battle they've been trying to fight.

  2. Cut Out the Middle Man? by Kunedog · · Score: 4, Insightful

    Apple is said to have discovered a highly sophisticated fraud scheme in which organized thieves would buy or steal iPhones, remove valuable components like the processor or logic board, swap in fake components, and return the "broken" iPhones to receive replacements they could resell.

    How about simply selling the bought/stolen iphones instead? I don't understand the scam, unless they are removing enough parts over time to occasionally construct a whole iphone. And even then I don't understand.

    Is this just propaganda pushing a narrative to justify Apple locking out third-party repair services?

    1. Re:Cut Out the Middle Man? by SethJohnson · · Score: 4, Informative

      I don't understand the scam, unless they are removing enough parts over time to occasionally construct a whole iphone.

      Once you've had your phone repaired, you'll see that there is a spectrum of quality in the replacement parts that can be used by the repair shop. The parts cost scales with the quality. Two big dollar items that are frequently replaced are screens and batteries.

      In this scenario, the fraudster is buying a brand-new phone. Then taking out the top-shelf battery and screen and replacing them both with sub-par components. The fraudster is then commissioning a straw man to return the phone to the store, receiving a brand-new phone which is then sold to recoup the initial cash outlay for the original purchase of the phone. The fraudster is then selling the screen and battery as OEM-quality replacement parts to repair shops. This last part is where the ??? profit exists.

      --
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    2. Re:Cut Out the Middle Man? by ShanghaiBill · · Score: 2

      How about simply selling the bought/stolen iphones instead?

      1. The phone would have to be sold as "used", without a box. If they exchange it at the Apple store, they will get a brand new phone, still in the box, with all the documentation and accessories. It will sell for a much higher price.

      2. The phone contains an IMEI that can identify it as stolen, so it may be locked out of some cellular networks. So why wasn't Apple checking the IMEI before authorizing an exchange? No idea. But maybe they were stolen and exchanged so quickly that it wasn't reported yet. Thieves often have remarkably efficient logistics.

    3. Re:Cut Out the Middle Man? by TheFakeTimCook · · Score: 3, Informative

      Apple is said to have discovered a highly sophisticated fraud scheme in which organized thieves would buy or steal iPhones, remove valuable components like the processor or logic board, swap in fake components, and return the "broken" iPhones to receive replacements they could resell.

      How about simply selling the bought/stolen iphones instead? I don't understand the scam, unless they are removing enough parts over time to occasionally construct a whole iphone. And even then I don't understand.

      Is this just propaganda pushing a narrative to justify Apple locking out third-party repair services?

      You aren't comprehending the scope of this.

      The fraudsters are taking out anything that doesn't show without a disassembly, then returning the phones for an EXCHANGE. Apple then has to pretty much SCRAP what is left.

      How does that NOT damage Apple?

    4. Re:Cut Out the Middle Man? by b0s0z0ku · · Score: 2

      If Apple sold replacement parts at a reasonable price over the counter, this type of scam/black market wouldn't be needed.

  3. Re:20+% still pretty horrible by ShanghaiBill · · Score: 4, Interesting

    I wonder where all the parts they are ripping out of the insides end up?

    A lot of them end up in fake iPhones, using either knock-off cases, or cases stolen from the Apple factory in Shenzhen.

    In any area frequented by gullible foreigners, you can find people selling iPhones on street corners. They often work just well enough to turn on and run a demo to "show that they work".

    The sellers are rotated to different street corners every few hours, so when you go back later to demand your money back, it is not the same person, and they will claim (correctly) that they have never seen you before.

    Not all Chinese fakes are like this. For instance, the fake Rolex watches work very well. I bought my wife a fake LV handbag that seems stitch by stitch identical to the real thing. She has no idea that it isn't real.

  4. Apple repair fraud. by mrclmn · · Score: 2

    Good on you Apple. Now I hear there's a ton of fraud in Toronto with regards to Apple repair. Any comments on that? Are those crickets I hear?

  5. Louiss Rossman voiced different opinion on that by NuclearCat · · Score: 2

    I suggest to watch, here voice of well known repair professional
    https://www.youtube.com/watch?...

  6. Re:20+% still pretty horrible by Luthair · · Score: 2

    I was wondering if they might actually be the source of parts for independent repair shops.