Fake iPhones
Chinese Police Bust Major Scam Involving Fake iPhones to Exploit Apple’s Returns Policy .

The Chinese Police have reportedly arrested five prime suspects in a major scam involving exploitation of Apple's returns policy and swapping of genuine iPhone 4S parts with counterfeit ones. The suspects were later identified as five employees working for an official iPhone distributor, Wenzhou Apple shop, in China.

The accused have been charged with exploiting Apple's returns policy by exchanging fake iPhone parts for real ones worth around CN¥400,000 (£42,265). The report further suggests that the genuine parts were then used to craft fake iPhones for sale in December 2012.

Although the distributor initially claimed to be innocent, the police on further investigation found that 118 of the 121 iPhone 4S BAND parts were activated on the same day (containing the same "C8PJ" identifier in their serial numbers), which aroused suspicion of foul-play leading to the arrest. It was also ascertained that the culprits had disguised the fake device with genuine iPhone serial numbers printed on them to avoid detection.

According to TechWeb, BAND is the core component of an iPhone with each part worth around 3,000 Chinese Yuan or £315. Every fake iPhone built and sold in the market reportedly yielded a profit of 1,000 Yuan (£105) in one go.

Check out the video below depicting the making of fake iPhones by Chinese manufacturers since 2011 (when a similar scam was reported via iPhone Hacks):

As The Register notes, it took almost a month for Apple to bust the scam following the shop owner's interrogation with the help of police. A shop engineer and her girlfriend were allegedly the masterminds of the scam, who were later arrested. Although the scam was brought to light in January, Apple company is yet to salvage its stolen iPhone components.