A major fraud investigation has been opened after it was discovered several consumers purchased clay iPads from popular retailers in Canada.
According to CTV News, approximately two dozen fake iPads, constructed of modeling clay, were sold in Metro Vancouver retail stores.
Future Shop, Best Buy, Walmart and London Drugs are all investigating incidents of clay iPad 2s being sold off their shelves. Apple is reportedly a part of the investigation but has not provided any comment on the fraud.
In what looks to be a professionally crafted scam, it appears fraudsters purchased the real iPads with cash, then carefully placed clay models into the boxes, complete with proper shrink-wrapped sealing that made the products appear brand new. Then the scammers returned the items to the store where retailers seemingly restocked the products back on shelves without checking inside the box.
Consumers who bought the items were dismayed to learn when they opened the boxes, they didn't buy iPads, but found they had purchased wads of clay shaped in the form of an iPad.
Mark Sandhu told CTV News he purchased a $620 iPad at Future Shop for his wife as a Christmas gift. However, when his wife, Sundeep, opened the box, there was no iPad inside.
"I was shocked. I did not expect this from Future Shop. When you purchase something from there you expect the product to be there," he said.
Sandhu said he brought the product back to the store and said the manager treated him as if he was the scammer. "Maybe the way I was dressed, I don't know," he said. "She made me feel like I'm trying to scam them out of $700. I was the one getting scammed."
Getting nowhere, even after contacting Future Shop headquarters, Apple and local police, Sandhu took his story to CTV News. The situation has since been rectified by Future Shop and Sandhu received an apology, refund and new iPad, according to the report.
It turns out there are other victims of the clay iPad 2 scam. A day after the Future Shop and Best Buy investigations were revealed, both Walmart and London Drugs said this type of incident had occurred in their stores as well.
In a follow-up story, CTV News reported London Drugs said "it is aware of four incidents in the past month." Walmart didn't provide the media with an exact number of fake iPad incidents, however did say the retailer has had less than 10 cases.
"It was all sealed properly and everything. It was the shape of an iPad. They even had a piece of clay where the charger went and everything. Like, they knew what they were doing," Walmart customer Dayna Chabot told CTV's Steele on Your Side in a telephone interview.
She had made her purchase a few days after New Year's Day. Chabot said Walmart was good about the return and did not give her a hard time, but the store representatives were "baffled."
As a result, Best Buy, Future Shop and London Drugs have changed store return policies. Now employees will open high-ticket items, in front of the person doing the returning, and ensure the product being returned is actually inside the box and all components are intact. Best Buy/Future Shop also said, going forward, they will only sell products shipped directly from Apple, in its factory seal. Walmart said the company is not changing its return policies at this time.
According to Statistics Canada, in 2008, the most common type of fraud reported by retail businesses was return fraud. The Survey of Fraud Against Businesses (SFAB) found return fraud made up 32 percent of fraud against businesses.
The statistics also cited "half of retail and insurance business establishments experienced some type of fraud" during the year preceding the survey. Most fraud is also committed by "individuals other than employees," said the 2008 survey.