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

Italian Architect's 1st Asia Solo Exhibit Debuts in Shenzhen

Gaetano Pesce will be presenting his unique handcrafted works at Sea World Culture and Arts Center.

Remember Shenzhen's Shaky Skyscraper? Here's Why It Wobbled

Local media reported that the roads around the building have been fenced off.

Tim Hortons and Tencent Esports Open Shenzhen Collab Coffee Store

Tim Hortons has partnered up with Tencent to open a new type of social gaming space in Nanshan district.

Immersive Optical Illusions at Leandro Erlich Shenzhen Exhibit

‘The Confines of the Great Void’ is on now until November 7.

Secret Passageway Links Shenzhen Club to Kindergarten Playground

Parents discovered this passageway during an open house in August.

1 Asymptomatic COVID-19 Case Reported in Shenzhen's Nanshan

The patient had quarantined in Shanghai, then returned to Shenzhen for home quarantine.

Shenzhen Traveler Sleeps at McDonald's due to COVID Restrictions

The traveler was refused at a Shenzhen hotel as they were just in Sanya.

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

Weekly updates to your email inbox every Wednesday


Download previous issues

Never miss an issue of That's Magazines!

Visit the archives