Hong Kong police have recorded 1,503 reports of unauthorized credit card purchases involving Apple’s new iPhone 18, with the combined value of the transactions exceeding HK$30 million.
Commissioner of Police Joe Chow Yat ming said the cases surfaced after the smartphone went on pre sale in early September, when suspected fraudsters exploited a weakness in Apple’s online ordering process to place unauthorized orders.
All of the reported transactions have since been canceled, meaning cardholders, financial institutions and Apple did not suffer direct monetary losses from the purchases, Chow said.
Police investigate suspected online checkout loophole
Speaking after a Kowloon City District Council meeting on Tuesday, Chow said initial investigations pointed to a suspected weakness in Apple’s online checkout system.
According to police, the process allowed some online purchases to proceed without the usual identity and payment verification requirements. Investigators believe fraudsters took advantage of that weakness to submit orders using unauthorized credit card details.
The suspected operation also involved efforts to conceal where the orders originated.
Police said fraudsters used virtual private networks, commonly known as VPNs, to disguise their geographical locations while placing orders. They also provided fabricated or incomplete delivery addresses.
The combination made it more difficult to immediately establish the identity and location of the people placing the orders.
Runners allegedly used to collect the phones
The suspected fraud did not stop after Apple identified problems with delivery information.
According to Chow, Apple later sent confirmation emails asking for clarification about some addresses. The suspected syndicates then designated public pickup locations instead of providing genuine residential or business addresses.
Runners were allegedly recruited to collect the devices from those locations.
That arrangement created distance between the people who placed the orders and those who physically received the phones. Police are now working to identify the individuals responsible for organizing the purchases and coordinating the collections.
Chow said police would continue pursuing the suspected syndicate. He also asked Apple to review its transaction procedures before another phone pre sale scheduled for next month.
Fraud reaches half of all reported crime
The iPhone cases emerged as Hong Kong police reported a broader increase in fraud during the first eight months of the year.
Police recorded 59,213 crimes during the period, representing a 0.2 percent increase from the same period a year earlier.
Fraud cases rose more sharply. Authorities recorded 29,670 cases, an increase of 4.5 percent year on year. Reported losses also increased, reaching HK$5.21 billion, up 3.8 percent.
Fraud accounted for 50 percent of all reported crimes during the first eight months, according to the figures cited by Chow.
The numbers show how heavily fraud now features in Hong Kong's overall crime figures, with scams accounting for one out of every two reported crimes during the period.
Phone scams overtake online shopping fraud
The types of scams being reported have also changed.
Phone scams became the largest fraud category during the period, accounting for 27 percent of cases. Online shopping fraud followed with 23 percent.
More than 2,000 fraud complaints were recorded in August alone. Around 80 percent involved suspects posing as customer service representatives, according to Chow.
The impersonators can claim to represent banks, online platforms, delivery companies or other businesses before attempting to persuade victims to provide personal information, transfer money or follow instructions that expose their accounts.
The high proportion of customer service impersonation cases has added pressure on investigators and financial institutions to identify fraudulent activity before money is transferred.
Police face problems tracing local phone numbers
Another issue identified by police involves the use of local telephone numbers in scams.
Investigators found that about three quarters of the calls linked to the cases came from local numbers. However, tracing the registered owner of a number does not necessarily identify the person responsible for the fraud.
Chow said renting, lending or selling telephone numbers is not currently a criminal offense. As a result, a person whose name is attached to a SIM card can claim that they did not know the number was being used for fraudulent activity.
Even when police arrest the registered owner of a SIM card, investigators may face difficulties proving that the person knowingly participated in a scam.
This creates an additional layer of difficulty for police attempting to trace fraud networks that rely on large numbers of telephone accounts.
Police call for changes to SIM card rules
The number of prepaid SIM cards that one person can register is another concern raised by Chow.
Under the existing regulatory framework, an individual can register up to 10 prepaid SIM cards with each telecommunications carrier.
Police want the rules changed to make it harder for fraud networks to obtain and use telephone numbers through other people.
Chow urged the relevant authorities to introduce legislative amendments as quickly as possible, arguing that the existing framework leaves a gap that fraudsters can exploit.
iPhone investigation puts online verification under scrutiny
The iPhone 18 cases have also placed attention on the security checks used during high demand online product launches.
The reported transactions were canceled before direct monetary losses occurred, but the investigation has raised questions about how unauthorized buyers were able to submit such a large number of orders.
Police have asked Apple to review its transaction process before the next phone pre sale.
The investigation will now focus on identifying the people behind the suspected syndicate, determining how the unauthorized card details were obtained and establishing the roles of the individuals allegedly recruited to collect the phones.
At the same time, police are seeking changes to the wider regulatory system governing telephone numbers as fraud continues to account for a large share of reported crime in Hong Kong.
With another major smartphone pre sale expected next month, will stronger identity checks and tighter controls on SIM card registration prevent another wave of fraudulent orders?