Scammer dupes Apple out of 9,000 iPods

Nicholas Woodhams, 23, from Michigan, took advantage of flaws in Apple’s hardware return system to trick the company into sending him free iPod Shuffles, according to court documents filed in federal court in Grand Rapids.

Apple replaces faulty iPods automatically once the serial number of the device has been given. If the customer does not return the faulty device then the company charges their credit card for the replacement cost.

“Through trial and error, the defendant determined that he could guess valid, warrantied serial numbers and enter them into Apple's Web site for 'replacement' units without ever in fact purchasing or possessing the 'original' units," Assistant U.S. Attorney Nils Kessler wrote, the San Francisco Chronicle reports.

Woodhams set up a dummy mailbox to receive the hardware and used prepaid Visa cards to grantee delivery, even thought the cards did not cover the purchase cost of the devices. He then sold them online for less than the retail price.

The case is likely to cause a re-examination of Apple’s hardware replacement service, since it seems incredible that the company did not notice the high number of returns Woodhams was making.