Europe Hunts Fraud Network Selling Used Phones Online
“Al Arabiya.net” – Competent authorities conducted raids in 19 European countries as part of an investigation into a massive fraud scheme involving the sale of used mobile phones online as new devices. The European Public Prosecutor’s Office has estimated the losses at no less than 300 million euros.
Since last Saturday, authorities carried out more than 160 searches and seizures, involving approximately 1,770 police, customs, and tax officials. The operation led to the arrest of seven suspects in Austria, Germany, and Spain, including two suspected leaders of the criminal organization, the European Public Prosecutor’s Office announced yesterday.
Investigations revealed that the organization sold over one million used mobile phones as new, after assembling them from used components in Hong Kong and several other countries. The devices were then shipped to the Netherlands, repackaged to appear new, and distributed from there.
From the Netherlands, the phones were transferred to warehouses in Germany, where they were offered for sale to consumers across the European Union via online platforms, according to the findings announced by the European Public Prosecutor’s Office.
In one operation in Germany, authorities in the city of Krefeld seized between 10,000 and 15,000 devices from a warehouse. The phones were inspected one by one, their serial numbers recorded, and preparations were made for their transfer.
Police, customs, and tax authorities from the relevant countries participated in the operation, alongside Eurojust and Europol, while a witness was interviewed in the United Kingdom. The European Public Prosecutor’s Office confirmed that the investigation is codenamed “Troja” and was launched following a report from the European Anti-Fraud Office (OLAF). It emphasized that the investigation is ongoing to determine the full extent of the network and identify all individuals involved, reiterating that all suspects are presumed innocent until proven guilty in competent courts.
Investigations also revealed that the network did not merely deceive buyers; it is also suspected of fraudulently exploiting a reduced tax regime since 2018 to boost its profits.
The organization established shell companies in several European countries, including Austria, Bulgaria, Germany, and the Netherlands, as well as in Switzerland, and used the “margin scheme” for VAT on the online sale of phones.
This system legally allows the resale of used goods with value-added tax calculated only on the profit margin—the difference between the purchase price and the resale price. However, it does not apply in the same way to new goods, which must be taxed based on their full price. Authorities suspect that the network falsely declared the phones as used to benefit from the lower tax treatment, despite selling them to consumers as new.
