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In a pair of articles published over the past week, Hardmac reveals that Apple has been working to fight against fraud perpetrated against the company by third-party authorized service centers. According to the initial report published last week, the fraud was conducted by repair centers both charging customers for out-of-warranty repairs and also reporting to Apple that the machines were under warranty, thus receiving free parts as well as remuneration from Apple for conducting the repairs.
Thus, certain After-Sales Service Centres could pass under guarantee of repairs, machine that were not covered, and also invoiced these repairs to the customer thus ensuring a healthy profit to them.
In yesterday's follow-up article, Hardmac provides a bit more detail on how this was accomplished, using a process known as "stitching" in which vendors utilized the serial numbers of computers under warranty held on file at the repair facility when reporting issues to Apple rather than the actual serial numbers of non-covered equipment brought in for service.
Stitching is the process by which an Apple Service Provider (ASP) technically defrauds Apple. This happens by a customer coming in for an out-of-warranty repair (as an example lets use a macbook top case). The customer's macbook top case is no longer working and they are happy to pay to get it fixed. Instead of the ASP ordering the part from apple as out-of-warranty and making around 15% gross profit margin, the ASP would find a serial number in their database of previous repairs (of an identical model) and order the part as a warranty part from a serial number they have found. This technically allows the ASP to pay nothing for the part, but then make 100% margin.
Apple reportedly discovered the fraud only after several years of experience with its own Genius Bar repair channel, where significantly lower proportions of warranty repairs were seen. Upon conducting audits of its American and then global authorized service centers, the company apparently found a number of cases of significant fraud perpetrated using this method.

According to the report, at least one large service center in the United Kingdom has been entirely closed down in the wake of Apple's fraud investigation, with several others in the "Far East" also possibly meeting the same fate.

In order to address the fraud, Apple has reportedly rolled out enhanced tracking of part numbers in its repair ordering system and deployed software to assist the company in making sure that the proper parts are being installed in the proper computers.

Article Link: Apple Reportedly Addressing Fraud by Third-Party Service Centers
 

jared_kipe

macrumors 68030
Dec 8, 2003
2,967
1
Seattle
Huge surprise!!

Its a scam that a 5 year old could come up with. Practically every part inside these computers are serialized, why were they not cross checking the received defective part's serial against the one that left the factory?
 

akadmon

Suspended
Aug 30, 2006
2,006
2
New England
How about the scam Apple is running on owners of 2006-2207 Mac Pros in which Apple refuses to honor their warranty on ATI 4870 video cards purchased for those machines, simply because in its infinite wisdom Apple decided these cards are not compatible with those models of Mac Pro, even though the cards work just fine in them?
 

brownieguy19

macrumors regular
Jun 30, 2007
160
0
Number 1 on the fraud list should be....

Best Buy.

I have personally overheard conversations by sales people telling an innocent couple they need to purchase the Best Buy protection plan. (Because it is better than Apple Care) Just as I would in any case, I enter myself into the conversation and tell the consumer they do not need to buy Best Buy's plan and can wait up to a year to purchase AppleCare, for les money than the BB protection BS. As the sales person back peddles, I find they are often incredibly misinformed and are simply reading from a script.

I have always had an OK experience at Best Buy, but I would NEVER suggest to anyone purchasing an Apple product from Best Buy, or bringing it back to the store for repair. It absolutely IRRITATES me when I see a beautiful brand new iMac sitting back in their Geek Squad, knowing a family was ripped off by some up-sell. IMHO, their tactics are no less deceiving than this other fraud being described.
 

Mal

macrumors 603
Jan 6, 2002
6,249
17
Orlando
Number 1 on the fraud list should be....

Best Buy.

I have personally overheard conversations by sales people telling an innocent couple they need to purchase the Best Buy protection plan. (Because it is better than Apple Care) Just as I would in any case, I enter myself into the conversation and tell the consumer they do not need to buy Best Buy's plan and can wait up to a year to purchase AppleCare, for les money than the BB protection BS. As the sales person back peddles, I find they are often incredibly misinformed and are simply reading from a script.

I have always had an OK experience at Best Buy, but I would NEVER suggest to anyone purchasing an Apple product from Best Buy, or bringing it back to the store for repair. It absolutely IRRITATES me when I see a beautiful brand new iMac sitting back in their Geek Squad, knowing a family was ripped off by some up-sell. IMHO, their tactics are no less deceiving than this other fraud being described.

You do realize that what you're talking about has absolutely nothing to do with the topic being discussed, right?

I'm glad to see Apple cracking down on this, as I would any other company being defrauded by idiots trying to make a quick buck.

jW
 

hiimamac

macrumors 6502a
Jun 7, 2007
610
0
Boston
I don't see this as front page news... it's not like it is common only to Apple.

Indeed. You will find this in any major company, sometimes not in the light if money either, e.g. One if the big three auto America auto dealers, if not all, creating parts that break in 2-3 years or, another example, Evette get your car fixed then 6 month later, if not sooner, something else breaks. Coincidece. Hardly. That's why rightvafter the manufacture warranty is over, things start falling apart. They CAN make these parts last ten years but don't.

One thing I like about apple, except the older mice aneld iPhone cables, is that for the most part, they can last 6+ years if not moved all the time.

Peace.
 

zed2

macrumors 6502a
Jul 17, 2004
606
59
Bucks
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Hmm I wonder which was the UK company they closed down. I've dealt with a few here in the UK and I'm note sure I could say one has gone smoothly.
 

maelstromr

macrumors 6502
Aug 8, 2002
418
190
Charlottesville, VA
How about the scam Apple is running on owners of 2006-2207 Mac Pros in which Apple refuses to honor their warranty on ATI 4870 video cards purchased for those machines, simply because in its infinite wisdom Apple decided these cards are not compatible with those models of Mac Pro, even though the cards work just fine in them?

So you stuffed an unsupported product into a computer, (as I recall didn't Apple say they wouldn't support installing these cards in the old Mac Pros from day 1?) and are now mad that it won't be supported, in said unsupported install? Aside from being off-topic, this seems fairly irrational.
 

Canal Noises

macrumors newbie
Sep 15, 2009
3
0
I'm not trying to defend these service centers or say that they aren't doing anything wrong, but I bet Apple wouldn't have these problems if they didn't make it so hard for these companies to make any money. Apple makes huge margins on their computers, but only lets Authorized Resellers make around 10% on each.
 

globalhemp

macrumors regular
Jan 2, 2006
118
5
United States
Apple repairs

I purchased an iMac in 1999. I originally tried to buy it locally, but my local supplier had none in stock and they were not too friendly. So, I decided to purchase from mail order catalog "Club Mac."

Doing so enabled me to double my RAM from something like 64 MB to 128 MB or something like that for "free" so long as I paid them $30 or so to install it -- still a bargain at that time! I also got free shipping and no IL sales tax.
However, once I received my iMac, the dial-up modem made noises. I turned the modem to mute, still noisy. I turned the system volume to mute and it still made noises. So, I called Apple for help. Then found that the motherboard was bad and needed to be replaced. Apple provided me with a support ticket number and told me to go get it fixed locally. That's where the real problem started.

The local Apple Authorized Reseller said that since I did not purchase my iMac from them, I would have to pay a $30 fee. I told them to go to hell. So, I called Apple and told them this did not seem right and Apple said that I was correct, they are not supposed to do that. Apple said they would tell "the highest authority" about this problem, but in the meantime I needed to find another dealer. So, I did ... one that was 70 miles away!

The dealer that was 70 miles away had the motherboard replaced in less than 24 hours and have ZERO charges for doing so -- the way a warranty is supposed to work!

A year ago, I spoke with another Apple Authorized Dealer and told them my story. The owner told me that it is in his agreement with Apple that he can -- and will / does -- charge a $30 fee for fixing Apple products that ARE covered under warranty. To me, this is not right.

The same dealer told me that since Peoria, IL will most likely never have an Apple Store, he wanted to build one at our upscale mall. He said that he submitted a proposal showing that his store would look almost identical to an Apple Store, and Apple said "NO!" to that. So, we will never have an Apple Store in Peoria and any attempt at trying to build one is shot down by Apple.

Bottom line: Apple needs to find a better method for Apple Authorized Dealers. Since most people purchase directly from Apple, there should not be a $30 or more charge for products that ARE legitimately covered by a warranty. However, it looks like Apple is concerned about illegal warranty repair, but they should look into ALL repairs -- and all the BS charges that are passed onto consumers.

An Apple laptop cost nearly double for slightly better hardware and certainly better OS, but at that price premium, users should get the red carpet rolled out for them. Hell, Apple should pick up the computer from my house via FedEx Next Day Air, fix it, and ship it back for some of these price premiums. Instead, we have local dealers who say that they are authorized to charge us, plus get paid by Apple for the warranty repair!
 

elppa

macrumors 68040
Nov 26, 2003
3,232
114
Why don't Apple just do out of warranty service themselves?

I'd be happier going via them to be honest.
 

flopticalcube

macrumors G4
Good. Apple should come down hard on these businesses. Luckily, its not widespread or Apple would have a weaker hand in dealing with them.

While I agree it probably happens in lots of other industries, its front page material because Apple discovered it and is putting a stop to the practice.
 

akadmon

Suspended
Aug 30, 2006
2,006
2
New England
So you stuffed an unsupported product into a computer, (as I recall didn't Apple say they wouldn't support installing these cards in the old Mac Pros from day 1?) and are now mad that it won't be supported, in said unsupported install? Aside from being off-topic, this seems fairly irrational.

Care to tell me what other upgrade options Apple gave me? OK, I'll tell you: buy a new Mac Pro. The only reason why 4870 is not supported on my Mac Pro is because Apple would rather have me pay for a new machine. Makes perfect sense, for Apple.
 

DTphonehome

macrumors 68000
Apr 4, 2003
1,813
2,598
NYC
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Reminds me of when apple retailers bitched and moaned when the Apple Stores first started. Apple couldn't stand for them doing a lousy job selling computers, so they decided to do it themselves, with spectacular results. I can see a future where apple only allows repairs at their facilities to prevent this sort of thing.
 

Rocketman

macrumors 603
This is only half of the story. The other half is a LARGE price differential in the favor of Apple on in-warranty customer damage repairs.

We had a MacBook Pro we damaged which was still under warranty. Apple quoted $1250 to do the repairs. A third party authorized shop did the repairs for $650.

So Apple has a disproportionate relationship with their own authorized third party repair shops (subject of several past lawsuits and formal complaints), which has only been accelerated by maximal pricing on retail sales and retail repairs offered in Apple Stores.

On another occasion I got a PBG4 repaired under warranty and it came back not only with its MacMall upgraded memory missing, but only 128mb of the original memory installed, thus causing repeated crashing, which Apple refused to fix. A third party did out of warranty repairs on the APPLE service and identified the problem, sold me new memory and handed me a working machine a year after its purchase.

I am just one guy and have been accused of being a Fanboi in the past, so it's gotta be bad out there.

Rocketman

Suggested public services by MacRumors

1. List of third party repair and upgrade shops by authorized or not. Ability to comment on service experience.

2. List of third party warranty services, especially that cover customer damage. IIRC they are the same or lower cost than Applecare.
 

darkplanets

macrumors 6502a
Nov 6, 2009
853
0
Why don't Apple just do out of warranty service themselves?

I'd be happier going via them to be honest.
This.

Fraud is fraud, regardless of cause, and I'd much rather have Apple themselves doing the repairs, not some half-assed Best Buy representative who doesn't even know the difference between SATA and PATA.

I kind of wondered myself why Apple doesn't have a large retail presence and allows for so many authorized retailers-- especially for repairs. One would think they would want to control the repair process, both in and out of warranty, with large repair centers.
 

DTphonehome

macrumors 68000
Apr 4, 2003
1,813
2,598
NYC
Wirelessly posted (Mozilla/5.0 (iPhone; U; CPU iPhone OS 3_1_2 like Mac OS X; en-us) AppleWebKit/528.18 (KHTML, like Gecko) Version/4.0 Mobile/7D11 Safari/528.16)

globalhemp said:
I purchased an iMac in 1999. I originally tried to buy it locally, but my local supplier had none in stock and they were not too friendly. So, I decided to purchase from mail order catalog "Club Mac."

Doing so enabled me to double my RAM from something like 64 MB to 128 MB or something like that for "free" so long as I paid them $30 or so to install it -- still a bargain at that time! I also got free shipping and no IL sales tax.
However, once I received my iMac, the dial-up modem made noises. I turned the modem to mute, still noisy. I turned the system volume to mute and it still made noises. So, I called Apple for help. Then found that the motherboard was bad and needed to be replaced. Apple provided me with a support ticket number and told me to go get it fixed locally. That's where the real problem started.

The local Apple Authorized Reseller said that since I did not purchase my iMac from them, I would have to pay a $30 fee. I told them to go to hell. So, I called Apple and told them this did not seem right and Apple said that I was correct, they are not supposed to do that. Apple said they would tell "the highest authority" about this problem, but in the meantime I needed to find another dealer. So, I did ... one that was 70 miles away!

The dealer that was 70 miles away had the motherboard replaced in less than 24 hours and have ZERO charges for doing so -- the way a warranty is supposed to work!

A year ago, I spoke with another Apple Authorized Dealer and told them my story. The owner told me that it is in his agreement with Apple that he can -- and will / does -- charge a $30 fee for fixing Apple products that ARE covered under warranty. To me, this is not right.

The same dealer told me that since Peoria, IL will most likely never have an Apple Store, he wanted to build one at our upscale mall. He said that he submitted a proposal showing that his store would look almost identical to an Apple Store, and Apple said "NO!" to that. So, we will never have an Apple Store in Peoria and any attempt at trying to build one is shot down by Apple.

Bottom line: Apple needs to find a better method for Apple Authorized Dealers. Since most people purchase directly from Apple, there should not be a $30 or more charge for products that ARE legitimately covered by a warranty. However, it looks like Apple is concerned about illegal warranty repair, but they should look into ALL repairs -- and all the BS charges that are passed onto consumers.

An Apple laptop cost nearly double for slightly better hardware and certainly better OS, but at that price premium, users should get the red carpet rolled out for them. Hell, Apple should pick up the computer from my house via FedEx Next Day Air, fix it, and ship it back for some of these price premiums. Instead, we have local dealers who say that they are authorized to charge us, plus get paid by Apple for the warranty repair!

Apple rejected a reseller from copying the exact style of the Apple Store? You're surprised by this? Apple builds their own stores so they can run them the way they like, not the way some dude in Peoria wants to run it.
 

elppa

macrumors 68040
Nov 26, 2003
3,232
114
This.

Fraud is fraud, regardless of cause, and I'd much rather have Apple themselves doing the repairs, not some half-assed Best Buy representative who doesn't even know the difference between SATA and PATA.

Funny how they know that other four letter acronym beginning with P — PITA…
 

phillipduran

macrumors 65816
Apr 30, 2008
1,055
607
Wait for it. . . Some people are going to be tossed out of some 15 story buildings. Don't !#!@# with Apple. :D
 
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