Apple Swindled for $3 Million: 5,000 Fake iPhones Sent for Repair, New Units Received as Replacements

China is known for being the world’s most productive country, and the majority of electronic products and devices we see in stores come from there. Additionally, China is also famous for creating its own versions of these devices, making cheap and economical copies that generally do not reach the same level of quality as the originals. Recently, two Chinese citizens residing in the United States have been accused of defrauding Apple by carrying out an iPhone repair scam.

For several years, various types of businesses have been conducted in China to make profits, not necessarily by legal means. The most common finding has been the sale of smuggled products, purchased in another country and brought to China to sell at higher prices. As a result, more than a dozen Chinese citizens have been caught at airports after being discovered by Chinese customs. These products have included CPUs, GPUs, SSDs, and even iPhones that were purchased in Hong Kong and attempted to be smuggled into China.

Two Chinese citizens defrauded Apple of $3 million with fake iPhones

On February 20, the US Department of Justice announced that two Chinese citizens residing in Maryland were charged with fraud. Haotian Sun and Pengfei Xue, both aged 33, submitted over 5,000 counterfeit iPhones to Apple for repair and replacement, successfully exchanging them for genuine iPhones. This caused a loss of more than $3 million to Apple, and the two individuals now face up to 20 years in prison.

The counterfeits reportedly had the same design and featured IMEI and serial numbers, albeit false. These fake iPhones were sent to Apple’s retail stores and official suppliers, including the Apple Store in Georgetown. It was not until December 2019 that the two Chinese citizens were apprehended.

With fraud charges filed against them, both individuals face potential prison sentences of up to 20 years. The sentencing is expected to be decided on June 21, 2024. Similar scams have occurred in the past when, in 2017, two Chinese students committed the same repair scam, causing the company a loss of $1 million.