Oregon students returned thousands of fake iPhones, costing Apple $900k

I recently heard of a friend of a friend who bought his mom a Tesla with profits from buying used iPhones on eBay and repairing them.

Maybe he was just submitting them to Apple with this same hack.

Edit: side note: it took a while to sell for not a lot of money. But other than someone needing to drill out a screw and caring about how it looked afterwards, i couldnt figure out why anyone would buy.

Because I'd heard this was rampant and sophisticated in China – with fraudsters being very advanced in their ability to make "junk inside" devices indistinguishable from authentic broken devices, via any cursory/external analysis. But, until this story, I hadn't heard of it at scale in the US. (And here, as well, it seems the high-quality fakes are coming from China.)

Yes, I'm from Oregon.

> The elements of wire fraud under Section 1343 directly parallel those of the mail fraud statute, but require the use of an interstate telephone call or electronic communication made in furtherance of the scheme. United States v. Briscoe, 65 F.3d 576, 583 (7th Cir. 1995) (citing United States v. Ames Sintering Co., 927 F.2d 232, 234 (6th Cir. 1990) (per curiam)); United States v. Frey, 42 F.3d 795, 797 (3d Cir. 1994) (wire fraud is identical to mail fraud statute except that it speaks of communications transmitted by wire); see also, e.g., United States v. Profit, 49 F.3d 404, 406 n. 1 (8th Cir.) (the four essential elements of the crime of wire fraud are: (1) that the defendant voluntarily and intentionally devised or participated in a scheme to defraud another out of money; (2) that the defendant did so with the intent to defraud; (3) that it was reasonably foreseeable that interstate wire communications would be used; and (4) that interstate wire communications were in fact used) (citing Manual of Model Criminal Jury Instructions for the District Courts of the Eighth Circuit 6.18.1341 (West 1994)), cert. denied, 115 S.Ct. 2289 (1995); United States v. Hanson, 41 F.3d 580, 583 (10th Cir. 1994) (two elements comprise the crime of wire fraud: (1) a scheme or artifice to defraud; and (2) use of interstate wire communication to facilitate that scheme); United States v. Faulkner, 17 F.3d 745, 771 (5th Cir. 1994) (essential elements of wire fraud are: (1) a scheme to defraud and (2) the use of, or causing the use of, interstate wire communications to execute the scheme), cert. denied, 115 S.Ct. 193 (1995); United States v. Cassiere, 4 F.3d 1006 (1st Cir. 1993) (to prove wire fraud government must show (1) scheme to defraud by means of false pretenses, (2) defendant's knowing and willful participation in scheme with intent to defraud, and (3) use of interstate wire communications in furtherance of scheme); United States v. Maxwell, 920 F.2d 1028, 1035 (D.C. Cir. 1990) ("Wire fraud requires proof of (1) a scheme to defraud; and (2) the use of an interstate wire communication to further the scheme.").

It's a fairly broad statute, but to answer your question, it depends on whether the "activity" in question meets all of the elements of wire fraud.

https://www.justice.gov/jm/criminal-resource-manual-941-18-u...

https://www.justia.com/criminal/offenses/white-collar-crimes...

It can't be applied to "any activity done with electronic device[s]," unless that activity is to trick people into giving you money in exchange for a bogus or nonexistent product or service.

As in the text of the law in a sibling comment, the rules parallel "mail fraud," which is the same: if you send a magazine offering to sell someone a fancy tool kit for $200, and they send a check and you send a box of dirt, you've committed mail fraud.

If you do the same thing over the phone or internet, it's wire fraud.

In this case, the fraud went the other way: Apple says "if you bought a thing from us, you can return it," students say, "we bought this thing, please give me money back," but really, they didn't buy it, because this thing was a fake.

I'm not a lawyer, but I think it's the lying about the counterfeit nature of the item returned is what makes it a crime. Focusing on whether it's wire or mail or some other kind of fraud, or what other kind of device activity is covered under the statute, is not as relevant as the lying part.

Then just etch them.

As for Apple ID... It’s not hard to create them. I think any credit card requirements are recent, and definitely not planet wide.

Yeah, losing out to counterfeiting stinks, but I think they prefer the perception of being customer service centered. Probably worth more to them than the losses it generates.

How the scam works - Apple sends their junk to China to remanufacture/recycle. There instead of being ground into a fine dust some end up in chinese panties to be smuggled out of the facility. Next someone pulls out most profitable still working parts, puts the phone back together and tries to pass it thru warranty process again: https://appleinsider.com/articles/18/10/09/rampant-chinese-i... Apparently they managed to get a grip on Chinese fraud, so scammers moved operation into US.

There is no such thing as Genius at the "genius" bar, they arent allowed to repair anything (can only sent it up the chain to Texas afair) and often dont even know how to open products, not to mention being able to tell what should be inside.

Broke students, who, seemingly managed to buy 3000+ Apple phones and return them? That's some terrible luck they had :-)

What's the alternative? Praise them as modern day Robin Hoods?