Federal prosecutors recently filed felony fraud and money-laundering charges against a Michigan man who is accused of duping Apple into sending him more than 9,000 replacement iPod Shuffles. According to court documents, Nicholas Woodhams of Kalamazoo, Mich. received 9,075 iPod Shuffles from Apple by entering valid serial numbers on Apple’s Online Service Assistant website. This website provides users with replacement iPods for defective devices that are under warranty. After receiving the iPods, Woodhams turned around and sold them for $49 apiece.
Woodhams ran an iPod repair business under the names iPod Mechanic, iMechanic, and Pod Tradeup. He had websites under the first two business names. Those sites have since been taken down.
Woodhams apparently discovered that he could guess valid,
warranted serial numbers and enter them into Apple’s website to receive a
replacement unit without ever purchasing a unit. Through the program, you must
provide a credit card number that can be charged $1 for a preauthorization fee.
Woodhams used Visa-branded gift cards for the preauthorization and had the
replacement units sent to a box at a local UPS store. When Apple did not
receive the defective unit Woodhams was suppose to return to Apple under the
repair agreement terms, Apple attempted to charge the cards for the cost of the
iPod. By then, the gift cards had already been exhausted so Apple was out of
The charges against Woodhams claim he compiled a list of manufactured or guessed iPod Shuffle serial numbers on an almost daily basis during the course of the scheme which lasted from March 2006 to October 2007. During that time, he sent more than 5,000 packages containing the stolen Apple hardware using the U.S. Postal Service.
Last June, Apple filed its own lawsuit against Woodhams, alleging he had fraudulently manipulated the replacement program. At that time, Apple asked the court to bar him from continuing his practice. Apple’s reported losses from the scam were $75,000. Apple’s lawsuit is currently on hold as a result of the recently filed federal criminal charges.