The much-ridiculed return policy for Apple products in China was exploited by scammers who exchanged fake parts for real and using the latter to build and sell new iPhones.
According to a report by TechWeb last Friday, five employees at an electronics store selling Apple goods were arrested in the Chinese city of Wenzhou after they submitted 121 fake iPhone 4S BAND parts back in December 2012. The BAND parts were the core of the phone and are worth about 3,000 yuan (US$476) each, it noted.
The scammers allegedly exchanged the fake parts for real ones, bought the back cover, battery and other components, then build and sell these put-together devices as new iPhone 4S handsets for a profit of 1,000 yuan (US$161.62), it added.
It took Apple a few months to spot the scam, but it found out, it informed the owner of the electronics store and an investigation was initiated.
The report noted the police arrested the five involved in the scam on April 5, 2013. These included the shop engineer and her boyfriend, who then implicated three other colleagues.
Apple's return policy in China has been much discussed in recent times, after the country's state-owned TV broadcasting network China Central Television Station (CCTV) aired an investigative report claiming Apple was treating local consumers with discrimination with regard to its after-sales service policy. Unlike other countries where consumers get a refurbished new iPhone if their original one is found to be defective during the warranty period, consumers in China get a refurbished iPhone but with the back cover off the original phone.
Apple CEO Tim Cook subsequently issued a formal apology on Apple China's Web site, pledging to improve repair policy for iPhone 4 and iPhone 4S devices, provide clearer language on its policies and improve supervision and training of Apple's Authorized Service Providers in the country.