EU investigators uncover scheme selling used phones as new
It has caused over €300 million in damages.
Used iPhone. By Marian Weyo/Shutterstock
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- Investigators say a criminal group sold more than one million used phones as new across the EU.
- The alleged scheme caused at least €300 million in consumer damages and over €30 million in VAT losses.
- Authorities arrested seven people in Austria, Germany, and Spain, including two alleged leaders.
- Prosecutors say used parts were assembled abroad, repackaged, and sold through online marketplaces.
Key Takeaways by nexos.ai, reviewed by Cybernews staff.
Investigators have uncovered a criminal organization suspected of selling more than one million used phones as brand new.
The scheme caused at least €300 million in damages to European consumers and a VAT loss of over €30 million to several EU member states.
Over 1,700 police, tax, and customs officers from 20 countries carried out 160 house searches. A total of 7 people were arrested in Austria, Germany, and Spain, including 2 leaders of the criminal organization.
The European Public Prosecutor’s Office (EPPO), an independent law enforcement agency that investigates crimes affecting the financial interests of the EU, is accusing the group of assembling mobile phones from used components in Hong Kong and the United Arab Emirates. Next, the phones were cleaned and packaged as new products.
The phones were then shipped to the Netherlands, from where they were transported to warehouses in Germany and sold on online marketplaces to customers across the EU. Investigators believe that this operation has been going on since 2018.
The scheme also involved VAT fraud. Shell companies in Austria, Bulgaria, Germany, the Netherlands, and Switzerland are suspected of exploiting a reduced VAT scheme known as “margin taxation,” under which resellers only pay VAT on their profit margin.
This VAT discount applies only to second-hand goods on which VAT had been paid already. However, having been sold as new goods, the VAT was due on the full price of the item.
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“The scheme allegedly misled customers all around the EU, it also created a VAT damage in every country where these used mobile phones were sold as if they were new,” EPPO states in a press release, which estimates that this resulted in a loss of VAT revenue of over €30 million for several EU member states.
The investigation began after a report from the European Anti-Fraud Office (OLAF).
Authorities in Austria, Belgium, Bulgaria, Croatia, Cyprus, Estonia, Finland, Germany, Italy, Latvia, Lithuania, Luxembourg, the Netherlands, Poland, Portugal, Romania, Slovakia, Spain, Switzerland, and the United Kingdom participated in Operation Troja.
