Apple seeks $23 million in damages from contracted recycler for reselling obsolete devices

Cal Jeffrey

Posts: 2,576   +591
Staff member
In a nutshell: Apple reportedly filed a lawsuit against a Canadian recycling firm in January for stealing and reselling more than 100,000 obsolete devices. The recycler was supposed to destroy the products and retrieve resources like cobalt for reuse, but instead sold them to "downstream" resellers for refurbishing.

The Logic notes that Ontario-based recycler GEEP was contracted by Apple to collect old iPhones, iPads, and Apple Watches and safely dispose of them. Reuseable materials were to be returned to Apple's suppliers. The company has been under contract since 2014.

Recently, Apple became suspicious during a warehouse audit when it found that GEEP housed some of its devices in an area not covered by cameras. So Cupertino checked the serial numbers of the products GEEP had received between 2015 and 2017. It found that 18 percent of the 531,966 iPhones, 25,673 iPads, and 19,277 Apple Watches were active on cellular networks.

"At least 11,766 pounds of Apple devices left GEEP's premises without being destroyed—a fact that GEEP itself confirmed," said the court filing. "These misappropriated devices were then subsequently sold at a significantly higher price than other recycled materials to downstream vendors who refurbished and resold the devices to consumers."

At least 103,845 devices were found to have been resold. Apple says that the actual totals are probably higher since it can only identify those connected to a carrier's network. So, for example, there is no telling how many GPS-only Apple Watches the recycler stole.

GEEP claims it has done nothing wrong and was unaware of the theft. However, Apple points out that the firm filed a separate lawsuit against three "rogue" employees in on the theft who were all executive management. Although the thieves had falsified documents in an attempt to cover their tracks, Apple's legal team is not buying the claim that the company was unaware of the illegal actions.

"The scheme was extensive and included members of GEEP's senior management," says the lawsuit. "GEEP's officers and directors knew or ought to have known about the scheme."

Apple says that theft and resale of its products hurt its business by driving down demand and possibly endangering its customers with products that were meant to be destroyed. It seeks 31 million CAD ($23 million) in damages and all of the proceeds from the sale of the misappropriated devices.

Image credit: Parilov

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tellmewhy

Posts: 30   +7
The rule in the warranties which say that you have to give the faulty item in exchange for a new it's abusive (there is no need for a change in the ownership of the device for identify the fault which triggers the warranty) and therefore invalid.

Therefore because the ownership changes instantly via sales and in 20 years after constant usability the ownership of all those devices still belong to the customers who had bought them. Therefore ALL the acts of ALL the others are more or less criminal because they handle illegally items that doesn’t belong them.
 
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Squid Surprise

Posts: 3,443   +2,341
It's simply greed... the company (or its leaders) saw a chance to make some cash and exploited the system.

Good for Apple for going after them.
 

tellmewhy

Posts: 30   +7
So you believe you should get a new phone, and continue to keep and use the old one?
If the first device was faulty it’s not in customers responsibility to change the ownership of his device to get a usable one.
A customer could seek damages much higher from the price of the device because in a good faith used a faulty device (do you remember the flammable batteries before few years?) and that’s why the warranties exist, to restrain those damages from go too high.
 
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Endymio

Posts: 603   +490
If the first device was faulty it’s not in customers responsibility to change the ownership of his device to get a usable one. A customer could seek damages much higher from the price of the device because in a good faith used a faulty device (do you remember the flammable batteries before few years?)
A warranty is simply a contract between the buyer and seller. If a device fails under warranty, and the warranty specifies that the buyer must surrender the device to receive a replacement -- then the buyer must do so. Basic contract law, and end of story.

The additional damages you mention regarding batteries lies under the entirely different legal realm of torts. If a device fails in a manner which causes you additional damages beyond the loss of the device (in this case, a fire), the seller is responsible for those damages. But that doesn't apply in this case.
 

Bullwinkle M

Posts: 372   +260
The fraud is by Apple!

The devices were not defective "or" unfixable, yet Apple will claim to "YOU" that whatever the problem is with your device, it will be less expensive to replace it

The devices "WERE" fixable at a very low cost, making resale a very viable option


Apple is stealing your money by defrauding you, and if you prove they are defrauding you, Apple simply sue's you!

They are criminals, pure and simple!

It's a FACT!
Look it up
 

Gars

Posts: 273   +14
"driving down demand and possibly endangering its customers with products that were meant to be destroyed"
wait, what?

like regular apple customer is giving a *hi*?

anyway, stealing is a crime.
[apple knows that, but dont give a single dime]

A Swiss railway clock at Zürich HB
but Apple dont even coment on that they used a some1 else design

for sure, apple will sue Zürich for various IP infringements
count on it
 
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tellmewhy

Posts: 30   +7
A warranty is simply a contract between the buyer and seller. If a device fails under warranty, and the warranty specifies that the buyer must surrender the device to receive a replacement -- then the buyer must do so. Basic contract law, and end of story.

The additional damages you mention regarding batteries lies under the entirely different legal realm of torts. If a device fails in a manner which causes you additional damages beyond the loss of the device (in this case, a fire), the seller is responsible for those damages. But that doesn't apply in this case.
The law has to support the good faith in the exchanges so rules in contracts that violate the good faith they are going to be invalid.

The people can’t sell their kidneys even if they have sign a contract just because the law has to support good social health too. They can't hire legally a killer with a contract for the same reason.

When someone writes a contract it doesn't mean that he can bypass all the laws.

So back to the subject, it’s against the good faith the sellers to add unnecessary requirements just to deliver a usable product. And it’s unnecessary to require change in the ownership of a proven faulty device before it's replacement. If that pass as accepted then it will open the door to other unnecessary requirements like no warranty in in products that sold under special conditions (like a discount for example or who knows what else) if that passes then the sales under special conditions suddenly they will become the common cases. So the warranties will lose de facto their legal power.
 
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m4a4

Posts: 1,987   +1,824
TechSpot Elite
For a company that likes putting out a good PR image (green company), they certainly don't support that behind the scenes. It would be far better to fix the devices than try to recycle them.

But hey, you can't get as much $$ for a refurbished device, and you have to pay to get it fixed properly. Apple doesn't have that kind of cash /s
 

quadibloc

Posts: 210   +126
Obviously, refurbishing an old phone has less impact on the environment than extracting metals from an old phone, because it saves more energy and materials. So while Apple's contract terms were violated, and the employees acted illegally, we should have environmental laws in place that ban wasteful practices like this one on the part of Apple. If an old smartphone can be refurbished, it ought to be allowed to be refurbished.
 

Endymio

Posts: 603   +490
We should have environmental laws in place that ban wasteful practices like this one on the part of Apple.
Why are so many people today not cognizant of the principle of freedom? Nations that attempt to micromanage business not only wind up with far lower standards of living than more free-market countries, but they usually do so in far more polluted and damaged environments. (Aral Sea, anyone?)

Furthermore, it isn't clear that repairing a phone always has less impact than simply recycling it. A minor repair to a phone that will be used several more years-- sure. A major repair to a phone that might fail again in a few months? Not so much. Paper recycling, for instance, is essentially a scam; in general it requires more resources, at a higher environmental impact, than simply making new paper from scratch. Pass a law requiring all electronics to be recycled whenever possible, and the economic law of unintended consequences will haunt you for decades to come.
 

brucek

Posts: 528   +612
TechSpot Elite
Of course they have to ask for your broken phone back when they offer you a new one. If they didn't, it would open the door to massive warranty fraud as every consumer would be incented to turn their 1 purchased phone into 1 phone to use + 1 phone to sell or part out.

If there was any consumer value in requiring a manufacturer to repair vs replace a phone, while I think that could theoretically work, I just don't see how it would be efficient or in anyone's best interests.
 
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Ludak021

Posts: 279   +209
For a company that likes putting out a good PR image (green company), they certainly don't support that behind the scenes. It would be far better to fix the devices than try to recycle them.

But hey, you can't get as much $$ for a refurbished device, and you have to pay to get it fixed properly. Apple doesn't have that kind of cash /s
out of curiosity: are they claiming they are "green" or? As a side-note: they are green because they are polluting in China and not USA?

smh, the cr*p from apple and the people that believe it (not you OP) is staggering.
 

m4a4

Posts: 1,987   +1,824
TechSpot Elite
out of curiosity: are they claiming they are "green" or? As a side-note: they are green because they are polluting in China and not USA?

smh, the cr*p from apple and the people that believe it (not you OP) is staggering.
You can look for yourself.
 
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lipe123

Posts: 935   +508
Apple is a bunch of scumbags honestly!
If you pay someone to get rid of something for you why do you care in what manner they do so!?

Since when does apple make money from hardware sales anyway, it's all from that 30% app store tax.
This move made Apple even more money and they are suing for losses?! WTF.
 

bexwhitt

Posts: 504   +205
It's clearly theft but the thing to note is Apple destroys perfectly good devices which for the good of the world (if not their bottom line) should have been fixed and reused.
 
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Ludak021

Posts: 279   +209
You all should know that Apple managed to destroy "the right to repair" bill, in that they managed to exclude everything regarding repair by 3rd parties and keep devices obsolete when they say they are.

Green, my a**

edit: oh, Louis Rossmann did a video on a subject, good.
 
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Reehahs

Posts: 966   +598
Obviously, refurbishing an old phone has less impact on the environment than extracting metals from an old phone, because it saves more energy and materials. So while Apple's contract terms were violated, and the employees acted illegally, we should have environmental laws in place that ban wasteful practices like this one on the part of Apple. If an old smartphone can be refurbished, it ought to be allowed to be refurbished.
This applies to most products really.