Insurance fraudsters are cashing in on Australia's iPhone fever, duping shoppers into buying second-hand phones before reporting them missing and picking up a new handset for free.
iPhone buyers lured by bargain deals soon find their prized purchase next to worthless as phone carriers block the handset from making or receiving any calls.
The unscrupulous seller meanwhile gets a brand new iPhone to replace the model they reported as lost or stolen.
"If people buying second-hand iPhones think they are getting a deal too good to be true, then it probably is," Australian Mobile Telecommunications Association spokesman Randal Markey told ninemsn.
Have you been the victim of a mobile phone insurance scam? Tell us your story.
One victim told ninemsn he took precautions when buying his smartphone but was still cheated.
"I arranged to meet [the seller] to test the phone and requested he provide me with a copy of his purchase invoice from the Optus World store where he bought it," John Baxi, a health professional from Melbourne, said.
"I also got him to provide me with a receipt of his own showing that he transferred ownership to me."
But the phone was blocked just one month later.
Mr Baxi discovered the Optus invoice and ownership document had been faked using another customer's details.
He was told Optus would only reverse the block if the original owner provided proof of purchased and transferred the phone’s ownership to him.
"I have since heard others bragging online about how the phone insurance can be used as a free phone upgrade," Mr Baxi said.
More sinister versions of the scheme — including one involving extortion — have emerged on Australian technology forum Whirlpool.
One duped buyer purchased an 8GB iPhone from an online marketplace for $550 in March, only to be told several days later by the seller that he had to pay an extra $150 or the phone would be blocked.
"I did not pay him because it [was] unreasonable and then after a few days, my phone's IMEI number was blocked," the buyer, who goes by the handle “Eucaesia”, said on Whirlpool.
Carriers use the IMEI number — a 15-digit code unique to the handset — to prevent phones from making or receiving calls when they are reported stolen.
Eucaesia said the phone displayed the message "waiting for activation" whenever it was turned on.
The user did not have any record of the ownership of the phone being transferred to his name, which under law meant the phone remained the seller's property.
But after threatening to report the seller to police, the phone was unblocked.
A spokeswoman from the Victoria Police Fraud Squad said that the insurance scam was "not an issue we have identified" but that they warned shoppers to be vigilant when purchasing second-hand phones.
Figures from the Australian Mobile Telecommunications Association show that between June 2007 and May last year, 104,000 mobile phones were reported lost or stolen and subsequently blocked.
It is impossible to tell how many of these phones were used in insurance scams.
Mr Randal said buying a second-hand phone is fraught with risk.
"We've had instances where people buy shoddy phones through newspapers and receive them in the post without checking to see if they work or aren't blocked, " the spokesman said.
Anyone who owns a mobile phone should record their IMEI number, which can be found by dialling *#06#, Mr Markey said.
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