Fake iPhone return scam cost Apple $12 million in losses, with five people charged with fraud

We’ve seen this type of scam before, but this particular case is on a massive, industry-like scale. Five people have been charged with fraud for participating in a fake iPhone take-back scheme.

Essentially, people would take nearly worthless, fake iPhone models to the Apple Store, claim they are defective, and ask for a replacement device. Apple would exchange the device for a valuable replacement phone that could then be sold. This procedure was allegedly performed 16,000 times.

The case notes estimated that Apple’s losses in connection with this program amounted to at least $12.3 million. The returned devices included thousands of iPhones, iPads and other Apple devices.

According to the indictment, the program lasted from December 2014 to March 2024 and was coordinated with groups in China from where the counterfeit devices were obtained.

The fake models used stolen ID numbers to make the phones appear to be real Apple products sold in the US, owned by real people and covered by the AppleCare warranty. It’s possible that the crime inadvertently deprived genuine customers of the ability to pursue legitimate warranty repairs because Apple’s systems had already processed the model identifiers.

To cover their tracks, co-conspirators requested repairs at multiple Apple retail stores throughout California, visiting as many as ten stores in one day. These individuals allegedly used false addresses and aliases, rented post office boxes, and used other tactics.

The case is now scheduled to go to court. If found guilty, the defendants face years in prison on each of the 22 counts; including wire fraud, mail fraud, aggravated identity theft and trading in counterfeit goods.