Apple Inc. (NASDAQ:AAPL) has a big problem, but it’s not one of its own making. There is a huge global market for fake power chargers for its iPhones. Many people assume AAPL insists on people using its own products to sell more accessories. But there’s a safety concern, too.
An investigation by a U.K. government agency determined 99% of fake Apple chargers fail even the most basic safety tests.
The results of using counterfeit Apple chargers could range from a fried iPhone to a house fire or even death.
Why the Fake Apple Chargers?
Apple includes a USB power adapter with every iPhone that it also sells on its own for $19. However, cheap knockoffs quickly appeared online for a fraction of that price.
Consumers who want to have a charger at different locations — home and work, for example — tend to go for the cheaper versions they find online. This is especially true in countries like China where there is less disposable income, but the issue affects all countries, including the U.S.
The problem is that these are fake Apple chargers, not the real thing. AAPL actually took legal action against Amazon.com, Inc. (NASDAQ:AMZN) last month, alleging that 90% of the Apple chargers sold by Amazon — directly, not just by third party Marketplace vendors — were fakes. They look identical to the original, right down to the Apple logo, but are cheaply manufactured,
History of Counterfeit Apple Chargers in the News
The issue with counterfeit Apple chargers goes way back.
In 2013, the company went so far as to institute a takeback program after a woman in China died from being electrocuted by a counterfeit Apple charger. People were encouraged to bring their knockoff chargers to Apple Stores for disposal, and AAPL offered genuine replacements for half price.
In recent weeks, China has again flared up as a problem area, with the iPhone 6 and iPhone 6s coming under consumer watchdog scrutiny. A growing number of the iPhones would unexpectedly shut down with 50% battery remaining, often refusing to power back up. It turns out those iPhones were being damaged by fake Apple chargers.
The latest news is the report from the U.K.’s Chartered Trading Standards Institute. That organization tested 400 fake Apple chargers bought online from vendors worldwide, including the U.S., and determined that 99% of them fail basic safety tests. In a press release urging consumers to get rid of these knockoffs, the organization said:
“It might cost a few pounds more but counterfeit and second-hand goods are an unknown entity that could cost you your home or even your life, or the life of a loved-one.”
In particular, a lack of insulation (one of the reasons they’re cheaper than the Apple originals) can lead to overheating and fires.
It’s easy to shrug and say this has nothing to do with AAPL. The problem is, its products are being damaged and/or blamed for incidents. People don’t always listen to the follow-up that investigation results determined it was a fake Apple charger that started a house fire, not an overheating iPhone.
The iPhone 6 issue in China — which escalated to the point of a formal investigation of the smartphones by the China Consumers Association — resulted in terrible PR for the company. That undoubtedly cost it sales in that country and here as well.
Then there’s the issue of who pays for repairs to the damaged iPhones. Forcing owners to pay could mean they walk away and buy a competing phone instead. Absorbing the cost sets a precedent and in the case of the iPhone 6 (which requires a motherboard replacement because of the charger overload) costs AAPL several hundred dollars a pop.
It’s a lose-lose situation for Apple.
The fake Apple chargers issue isn’t going to go away, even with legal action and consumer warnings. And despite the fact that it’s products from other companies causing the problems, AAPL will continue to take some of the fallout. At the end of the day, the best solution might be to combat the cheap counterfeit Apple chargers by slashing the price of the originals.
Selling its USB iPhone chargers at cost would go along way toward eliminating the knock off issue. And in the long run, the move is likely to be a lot cheaper than any goodwill repairs and the damage its reputation takes when iPhones are initially implicated in scenarios.
As of this writing, Brad Moon did not hold a position in any of the aforementioned securities.