College Students Busted For $1.2 Million iPhone Scam

Two engineering students from Oregon State University have been charged with scamming Apple out of $895,000 ($AU 1.2 million) using fake iPhones imported from China.

US federal prosecutors have accused Quan Jiang and Yangyang Zhou of importing more than 2,000 fake iPhones into the country using an associate from China that were handed on to Apple for repairs.

When Apple sent back replacements, real iPhones were then shipped on to China for sale and the students allegedly given a cut of the profits.

An Apple representative explained to the court that submission of an iPhone that is unable to be switched on immediately triggers the Apple phone replacement process as part of the product's warranty.

The students are accused of importing more than 2,000 fake iPhones. Image: AAP

The representative noted that submission of a phone that won't turn on is critical to successful warranty fraud in these cases.

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The prosecutors allege that thousands of warranty claims for the fake iPhones were submitted at the end of 2017 by Jiang.

Federal agents raided Jiang's home last year and found over 300 fake iPhones, as well as shipping records, warranty claim submissions, and boxes addressed to his alleged accomplice, Zhou.

Customs officials also seized shipments from China with 95 counterfeit phones that were addressed to Zhou.

While Apple had determined at the time of repair that the phones were false replicates, the company still agreed to providing the men with 1,493 authentic iPhones, to the cost of $1.2 million.