Chinese Scammers Exploit Apple’s Improved Warranty Policies

On March 15, the state-run China Central Television (CCTV) aired a prime-time special that accused Apple of unfairness regarding their warranty and customer-support policies.

Two weeks after China’s Central Television accused Apple of giving Chinese customers poor repair service on its iPhones and iPads, CEO Tim Cook posted a signed apology on Apple’s Chinese-language website.

The same day Tim Cook issued the apology to Apple’s Chinese customers and changed the company’s return policy, guaranteeing that any iPhone 4 and 4S brought in for repair under warranty in China would be replaced with new (not refurbished) parts, five employees at an electronics store selling Apple products were arrested in Wenzhou, China, for swapping fake iPhone parts for real ones. It appears that the scammers would take a back cover, battery, and other components, re-assemble the device and sell it as a new iPhone.

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The suspects used their credentials as authorized iPhone distributors to submit an order to Apple for 121 iPhone 4S BAND parts. These BAND parts make up the iPhone’s core components but exclude its battery and back cover. The price of one BAND unit was over 3000 yuan ($480).

It took Apple over a month to identify the scam, after which the owner of the store in question was informed and an investigation begun. The scammers were eventually caught at the beginning of April.

At first, the iPhone distributors denied all the accusations, but the police caught on to the trick after it was found that 118 of the 121 iPhones reported faulty were activated on Dec. 20, and contained the identifier “C8PJ” in their serial number. Police said there was little opportunity for so many of the same phones to be in need of repair. The suspects had also filed for the replacement order on December 28 and 30, just under Apple’s 15-day threshold for free returns on products.

As mentioned above, the investigation was being carried out at the same time as state-run media outlets in China, were accusing Apple of its dishonest returns policy. Apple would replace defective phones under warranty with new devices, but the problem appeared the company chose to use the back cover from the original phone so as to circumvent local laws requiring a reset on the warranty period. Anyhow, as mentioned before, Apple’s CEO apologized through a letter published on the Apple China web site and pledged to broaden warranty support.

However, as these types of scams began to happen, it is obvious that Apple has a lot to worry about what can accur in China.

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