Two Chinese nationals living in Maryland have been sentenced to at least four years in prison for conducting a yearslong iPhone repair scheme that cost Apple $2.5 million. Haotian Sun and Pengfei Xue exploited Apple’s repair process by sending more than 6,000 counterfeit phones to induce the company to replace them with genuine iPhones. The phones had spoofed serial and IMEI numbers to appear authentic to Apple employees, and were shipped from Hong Kong using DHL and UPS. The scheme was discovered by an Apple Brand Integrity Investigator who found that the fake devices had unique numbers belonging to real customers. Sun and Xue purchased UPS mailboxes in Maryland to receive and send the counterfeit phones, and they received more fake phones from Hong Kong for repair. Authorities arrested the pair in December 2019, and they were found guilty of conspiracy and mail fraud charges after a five-day trial in February. Sun was sentenced to 4.5 years in prison and ordered to pay Apple $1,072,200 in restitution, while Xue was sentenced to 4 years and ordered to pay $397,800. This case is not Apple’s first experience with fraudulent schemes, as other individuals have also been sentenced for similar crimes targeting the company. Additionally, the National Retail Foundation reported that return fraud cost companies $101 billion in 2023, with retailers losing an average of $13.70 for every $100 in returned products.
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