Kit Roberts
Two people have been sent to prison over a scam which reportedly cost tech giant Apple some $2.5 million.
Haotian Sun and Pengfei Xue ran a scam posing as a repair shop that sent counterfeit phones to the business.
They would claim that the phones couldn't be repaired in the hope that Apple would replace the counterfeit iPhones with the genuine article.
Sun and Xue lived in Maryland in the US, conducting the scam over several years and sending thousands of counterfeit phones to the tech giant.
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The counterfeit phones originated in Hong Kong, and would use spoofed serial numbers and International Mobile Equipment Identity numbers.
This enabled them to be passed off as the genuine article even to employees at Apple itself.
They also used particular faults that would make the phones eligible to be replaced according to Apple's policies.
Over the course of the scam they reportedly cost the company around $2.5 million.
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The pair would use UPS and DHL to ship the phones over from Hong Kong, according to Postal Inspector Stephen Cohen in court records.
Cohen wrote that the scheme was discovered by an Apple Brand Integrity Investigator, who discovered that the unique numbers used on the fake devices belonged to real customers.
According to court records, Cohen wrote: "Apple confirmed that some intercepted phones contained spoofed IMEI and serial numbers associated with other existing iPhones that were in-warranty at the time of the returns to Apple.
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"In addition, Apple analyzed a small sampling of iPhones recovered throughout the course of this investigation and confirmed that those phones contained counterfeit components."
Cohen added: "The email addresses provided to Apple in conjunction with the return of these phones were either registered to Sun or known to be used by him."
Apple is far from the only company to be targeted by this kind of scam.
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The scheme, which is known as a 'return fraud' reportedly cost companies in the US some $101 billion in 2023 according to data from the National Retail Foundation.
This meant that retailers can lose an average of $13.70 for every $100 of products that are returned to them.
Sun and Xue were arrested in December 2019 and were convicted of conspiracy and mail fraud.
Sun was sentenced to 4.5 years in jail and ordered to pay Apple $1,072,200 in restitution, while Xue was sentenced to four years and ordered to pay $397,800.
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UNILAD has reached out to Apple for comment.