Inside Apple’s War on iPhone Fraud in China — The Information

Five years ago, Apple was forced to temporarily close what was then its only retail store in Shenzhen, China, after it was besieged by lines of hundreds of customers waiting to swap broken iPhones for new devices, according to two former Apple employees who were briefed about the matter. In May 2013, the Shenzhen store logged more than 2,000 warranty claims a week, more than any other Apple retail store in the world, one of those people said.

After some investigation, Apple discovered the skyrocketing requests for replacements was due to a highly sophisticated fraud scheme run by organized teams. Rings of thieves were buying or stealing iPhones and removing valuable components like CPUs, screens and logic boards, replacing them with fake components or even chewing gum wrappers, more than a half-dozen former employees familiar with the fraud said. The thieves would then return the iPhones, claiming they were broken, and receive replacements they could then resell, according to three of those people. The stolen components, meanwhile, were used in refurbished iPhones sold in smaller cities across China, two of the people said.

This article is part of our archive of over 2,400 stories and is only available to subscribers. To give you a preview of the work we do, you can enter your email to access the full article.

Already a subscriber? Log in here

Daily news analysis

Every weeknight, we'll send you our reporters’ views on the day’s top tech news—distilled into one email.

Exclusive Articles

We broke it first. Receive original reporting, stories, and exclusives you won't read anywhere else from the largest newsroom in tech.

Conference calls

Go deep into areas like crypto and VC diversity—or get real-time analysis of breaking news—via conference calls with our reporters and other experts.

Special Events

For no extra fee, subscribers get access to more than a dozen events yearly, from intimate dinners to larger gatherings with marquee speakers.

Access the best reporting on the tech industry read by tens of thousands of global executives.

Become a contributor

Share your views and find other subscribers by completing your profile. You’ll be listed in our contributor directory.

Org Charts

Access the only collection of tech company org charts. Our expanding database includes companies like Amazon, Snap, and Uber.

Slack community

Discuss topics and current events with our subscriber-only Slack group and share news about your company with other subscribers.

Share with your team

Subscribers can unlock any article and share it with friends and co-workers through a special share link.

Stay up to date on Silicon Valley

Sign up for Jessica Lessin’s (The Information’s CEO & Founder) free Saturday newsletter and also receive a complimentary week of our daily afternoon tech commentary email.

Already a subscriber? Log in here

Recent Articles

‘In the old-school world, this would be a car chop shop, where you would take all the pieces off and sell them,’ said Kyle Wiens, CEO of iFixit. ‘Now they’re doing that with iPhones.’