Sophisticated Fraud Scheme in Shenzhen Costs Apple Billions

By Jonathan Zhong, October 11, 2018

0 0

Are you an iPhone user in Shenzhen? Are you constantly bringing your phone to be repaired? 

Well, Apple have just revealed details of a criminal scam which set the company back billions over the past five years in warranty and repair costs.

According to Apple Insider, criminal organizations in Shenzhen uncovered a significant loophole in Apple’s warranty policy. The groups began removing fundamental iPhone parts before bringing the phones back to Apple Stores to seek replacements.

The criminal scheme dates back to May of 2013, when one Apple Store in Shenzhen experienced the most complaints ever recorded in one week, as 2,000 people brought their faulty phones back looking for explanations or repairs. Apple’s warranty dictates that such faults require the company to replace or to fix the phones at their own financial cost. 

The fraudsters then found a way to further capitalize on this by reselling the component replacements or using them to refurbish other iPhones in smaller Chinese cities. The criminal undertakings thereby cost the company billions over the past five years.

Statistics from Apple reveal that in 2013, the company’s budget for handling global warranty claims was USD1.6 billion, while by the end of the same year, the actual amount spent on refunds reached USD3.7 billion. 

Apple scientists set out to find the source of the problem and introduced a series of measures to combat these fraudsters. Customers were thus required to show proof of iPhone ownership when seeking a warranty claim. 

While the fraudsters also responded with a series of aggressive retaliations against Apple over the years, the US company has managed to significantly curb the scale of these criminal acts in China. The percentage of warranty frauds across the greater China region dipping from 60 percent down to just 20 percent this year, according to IdropNews

[Cover image via Pixabay]

more news

Shenzhen to Build Close to 2,000 5G Stations in 2019

The new base stations are also expected to serve 851,000 users in the city according to a release by Shenzhen Government.

36 People Hospitalized, 32 Cars Destroyed After Fire in Shenzhen

According to pictures taken at the scene, a number of cars were totally destroyed during the fire.

Being a Smoker in Shenzhen is About to Get Much Tougher

New draft regulations address e-cigarette smoking, as well as the prohibition of smoking in a number of outdoor public spaces.

WATCH: The Laowai Running Tea Scams in a Shanghai Starbucks

The latest video from Shanghai comedy group Mamahuhu.

Watch Out for Pickpocketing and Other Scams Over CNY

Be careful of pickpocketing and other petty crimes during the Lunar New Year in China.

Spring Festival Gala in Shenzhen Set to Make Video Streaming History

Shenzhen will be the first city in China to implement the 5G technology for such purposes.

Each Day 400 People Miss Flights From Shenzhen During Chunyun

If you are planning on catching a flight from Bao’an International Airport this Spring Festival, make sure you arrive on time!

0 User Comments

In Case You Missed It…

We're on WeChat!

Scan our QR Code at right or follow us at thatsonline for events, guides, giveaways and much more!

7 Days in China With thatsmags.com

Weekly updates to your email inbox every Wednesday

Subscribe

Download previous issues

Never miss an issue of That's Magazines!

Visit the archives

Get the App. Your essential China city companion.