They sold used phones as new. The investigation also extends to Cyprus and Poland.

Over a million phones with used parts were supposed to be delivered to customers as brand new devices. The European Public Prosecutor's Office is investigating the activities of a group suspected of fraud that resulted in at least 300 million euros in losses for consumers and over €30 million in tax losses. Operation Troy covered 19 countries, including Cyprus and Poland.

1,770 police, tax, and customs officers participated in the operation, and over 160 searches and security operations were conducted. Seven suspects were arrested in Austria, Germany and Spain., including two alleged leaders of the group. EPPO did not report any arrests in Cyprus.

Used phones in new packaging

According to investigators, the devices were assembled from used components in Hong Kong and the United Arab Emirates. The phones were then cleaned and packaged to appear new.

The prepared equipment was shipped to the Netherlands and then transported to warehouses in Germany. From there, it was distributed to customers throughout the European Union via online sales platforms.

Buyers were led to believe they were paying for new devices. In reality, they received phones assembled from previously used parts. Investigators estimate that the group sold over a million such devices.

The problem wasn't just the refurbishment of the devices. Used phones can be sold as used or refurbished. In this case, the suspicion is that they were presented to customers as new.

What is known about the activities in Cyprus?

Cyprus was included in the list of countries where searches and seizures were carried out as part of the operation. Among the EPPO's partners, it lists the unit that executes European Investigation Orders and legal assistance requests, and MOKAS – Financial Intelligence Unit.

However, the report does not specify the number of locations searched on the island. It also does not identify local vendors, phone brands, or the number of residents affected.

In Poland, the Economic Crime Unit of the Gdańsk Municipal Police Headquarters participated in the operation. Again, the EPPO did not provide a separate report on domestic clients.

The fraud also involved VAT.

The investigation also concerns tax settlements. According to the EPPO, companies operating in Austria, Bulgaria, Germany, the Netherlands, and Switzerland have been illegally using the system since 2018. VAT margin.

In this type of settlement, tax is calculated on the difference between the purchase price and the sale price. However, its application requires certain conditions to be met.

According to the prosecutor's office, these conditions were not met in the investigated case, and VAT should have been charged on the full sale price of the devices. Investigators estimate the tax losses for several member states at over €30 million.

This is a separate amount from estimated customer losses. €300 million concerns consumer damage and over €30 million concerns lost VAT revenue.

No list of sellers published

The investigation began following a tip-off from the European Anti-Fraud Office (OLAF). The operation is coordinated by the European Anti-Fraud Office in Cologne, with support from Europol and Eurojust, among others.

At this stage, no list of stores, seller accounts, or device identification numbers has been published. Therefore, the mere fact of purchasing a phone online doesn't allow us to determine that it was purchased through this scam.

The proceedings are still ongoing. The arrests and suspicions described by the prosecutor's office do not constitute a final decision on guilt.

Sources: European Public Prosecutor's Office EPPO, Philenews