Apple trusts Phobio for its trade-ins, but maybe you should think twice

When Daniel McGloin decided to trade in his mid-2017 Apple MacBook in February of this year, he thought he was getting a pretty good deal. The software engineer and San Diego native initiated the trade-in with Apple through the Apple Store mobile app, where he was quoted $350 for his used laptop. He felt it was in pretty good condition, with no apparent damage to the case and a fully functioning display and keyboard. So McGloin packed up the device and shipped it in, expecting to receive his money in the coming weeks, which would help offset his purchase of a MacBook Air carrying Apple’s new M1 chip. 

The situation soon changed after his laptop arrived for inspection. Suddenly, McGloin was told his MacBook was worth just $140, less than half what Apple originally quoted. The mysterious culprit: “display has 3 or more white spots,” the Apple Store app told him. It’s a defect McGloin doesn’t remember ever seeing, and one that he should have noticed: typically, white spots on an LCD display are evidence of serious damage or burn-in and are clearly visible. In McGloin’s estimation, however, the laptop was in “excellent” condition, he tells The Verge, and he didn’t see any white spots when he packed it up.

So McGloin decided to search around online, where he discovered a lesser-known fact about Apple’s trade-in program. The company he had been dealing with was not actually Apple, but an Atlanta-based contractor named Phobio. Founded in 2010, Phobio is an enterprise service provider that specializes in offering white label trade-in services other companies can pass off as their own.

McGloin also found Phobio had a pretty questionable online reputation when it came to Apple products.

“It’s here I realized that number one, the trade-in program is not run by Apple, number two, there are lots of people observing the same behavior, and number three, this seems to be a new development in the last few months,” McGloin says.

The Verge inspected McGloin’s MacBook in person after he rejected the trade-in offer and Phobio returned the computer to him. We could detect no such white spots or any discernible damage whatsoever. The laptop booted up and operates like new, and it has since passed numerous online diagnostic tests. 

It’s not clear why McGloin’s estimate was halved. But his experience is indicative of a common belief that’s emerged about Phobio online — that the company stiffs owners of Apple products out of hundreds of dollars in trade-in value — and the supposed “3 or more white spots” defect seems unlikely enough that it bears investigation.

Two other people who spoke with The Verge and provided documentation of their Phobio trade-in processes also experienced a similar situation, in which “white spots” or other supposed defects, only detected after the device was shipped to a Phobio facility, resulted in reduced trade-in quotes. And that’s just a tiny sample of an online torrent of complaints against Phobio and its practices across multiple types of gadgets and with an alarming uptick in the last few months.

“Having used it for three years, I can tell you I never noticed a problem,” Carlos Pero, another Apple customer who had their laptop trade-in quote reduced by Phobio from $640 to $210, tells The Verge. Pero also asked for his laptop back, and Phobio returned it. Upon inspection, Pero could not detect any issues with his computer, and he showed us a video of his MacBook Pro booting up to verify there were no “white spots” present. “Maybe they have some diagnostic tool? But from a consumer perspective, no way I see a problem before I sent it or after receiving it back.”

Pero says he was never given any photographic proof of the white spots when his trade-in was adjusted. “They sent no such thing. Just the notification of the change in value and essentially the take-it-or-leave-it message which came by way of Apple,” he says. “I imagine it would be a tougher choice for someone who was counting on realizing the full value of the trade-in, who may not be able to afford a new computer otherwise.”

Scores of other instances of this exact situation happening to Apple product owners can be found online, too, with numerous customers citing Phobio’s “3 or more white spots” explanation as the reason for their adjusted trade-in, as well as stories of other types of apparent damage detected only after sending a device in for inspection. This isn’t just restricted to MacBooks, either. Customers often complain of reduced trade-in quotes for iPhones, iPads, and iMacs, too.

In some cases, like McGloin’s, Phobio’s name never comes up, so customers are left with the impression Apple inspected it and reduced their quote accordingly. “The only real ‘correspondence’ I had with Apple and Phobio were the interactions in the Apple Store app. I didn’t otherwise contact them through email or phone,” McGloin says. He tells us he was faced with the tough decision to either accept less than half the promised money or try to sell his computer elsewhere after going through the hassle of wiping it clean and shipping it. “I’m actually a pretty big Apple fan, but this feels off-brand and pretty shady,” he says.

Apple often prides itself on customer service and in handling many of its sales operations in-house. So the use of a third-party vendor not advertised publicly on its trade-in website — even in receipts, Apple only refers to an unnamed “trade-in partner” — is a peculiar approach for the iPhone maker.

Outsourcing trade-ins is common in the industry, though. Many businesses pick white-label inspection and recycling firms to cut costs and avoid the hassle of managing a cumbersome operation. Phobio also happens to be the trade-in partner of OnePlus in the US, and the firm also inked a deal with Amazon Canada just last month to handle trade-ins of “certain eligible mobile phones, laptops, iPads and Apple watches.” It handles trade-ins for Costco and B&H Photo, too.

Yet for Apple, which stakes its reputation on quality control, the negative experiences customers report having with Phobio threaten to undermine the image Apple has cultivated as a customer-obsessed product company, which, in turn, helps justify the company’s high-priced consumer tech.

Apple tells us Phobio is not the only company that helps manage its US trade-in program, but it wouldn’t name any others — and we verified that every type of product you’d trade in at Apple.com (computers, phones, tablets, and watches) is currently handled by Phobio in the United States. Apple also has a trade-in partner named Brightstar servicing Canada and other parts of the globe, but two Brightstar employees told us it no longer accepts US trade-ins. One referred us to Phobio specifically.

A podcast interview with Phobio founder and CEO Stephen Wakeling in 2018 includes vague details on the partnership. At one point, Wakeling tells the podcast host he’s not sure Apple would permit him to talk further about the program. Some news posts and forum threads as far back as 2017 mention Phobio as Apple’s trade-in partner, but it’s not clear how long the two have been in business; Apple first began accepting used iPhones at its retail stores in 2013, and the Apple trade-in program has since expanded to include close to its full lineup of hardware products.

It’s not like customers could just walk into an Apple Store to avoid Phobio, at least not where laptops are concerned. Up until last summer, Mac trade-ins, unlike with iPhones or iPads, were not eligible for in-store inspections by Apple employees at the company’s retail locations. Macs had to be sent in the mail, where Apple’s trade-in partner Phobio steps in. (Due to COVID-19 store closures and limitations on in-store services, it’s likely many customers have kept using the mail-in service for Macs.)

And even a cursory Google search on Phobio and its handling of Apple trade-ins returns dozens upon dozens of message board threads detailing bad experiences and a Better Business Bureau page with more than 500 complaints and new entries added almost every day. Many of these complaints are recent, and some are from Apple customers wondering openly if they’ve been a victim of some type of fraud or whether Phobio is a legitimate company.

When some customers complained, they reported Phobio’s provided proof consisted of grainy images that didn’t show clear-cut evidence. Some customers have detailed how they took photos of their devices prior to shipping them in in the event of disputes, only for Phobio to return photographic evidence they say either doesn’t illustrate the alleged issue or is too low-quality or obfuscating to serve as proper proof.

A large number of the complaints about Phobio have a common theme: a MacBook or iPhone that seems to be in perfect working order, only for the device to later have an unexplained deficiency. Phobio, which is at that point in possession of the device, then offers the customer the option to accept the reduced quote or ask for the product to be shipped back. (Phobio does offer to ship the product both ways for free.)

This presents a thorny set of choices for a device owner, primarily by seeding self-doubt as to the real value of the product they’re hoping to trade in and what their best option might be. What if the product did have the damage beforehand and they simply didn’t notice or perhaps something happened during transit? Maybe Phobio is using a proprietary diagnostic tool that reveals something no consumer could ever find on their own? What if, by some stroke of bad luck, the device was somehow damaged during transit, and you’d have a hard time using it or selling it somewhere else if you ask for it back? 

Chris Dwan calls his experience with Phobio a “pretty straightforward bait and switch,” telling The Verge that he mailed in his MacBook Air with an expected trade-in value of $370, only for it to be knocked down to $150 for damage to the outer shell he suspects happened during transit or inspection. “At that point it was take-it-or-leave-it. They did offer to ship the laptop back, but I caved and took my $150.”

At the end of the day, someone trading in their used Apple device is looking to get rid of it and hoping they’ll get a little cash for their trouble, instead of simply recycling it or leaving it to collect dust. That could make them easy to take advantage of: many are likely willing to take what they can get, rather than spend additional time and energy trying to get satisfaction from a company that’s holding all the cards, particularly when it’s not clear who’s to blame or whether their product is actually damaged. 

“White spots” or no, it’s not surprising that a company like Phobio would be facing loads of complaints. Every company working in customer service is likely to have its fair share of disgruntled customers complaining online; people with positive experiences tend to have little reason to share those stories with the world. Trade-in programs can involve especially fraught negotiations because of the money involved and the fear customers harbor of being scammed. Even rightful adjustments to trade-in quotes might inspire someone to leave a negative review or feel as if they’ve been had.

In fact, many people have reported positive experiences with Phobio — many never realizing they weren’t dealing with Apple directly. One Verge staffer says they were even given more money for an Apple trade-in after the device exceeded the quality estimate they were initially quoted on.

Phobio customer service representatives can also be seen replying to almost every single tweet, tagging the company’s support account, and Better Business Bureau post, asking how to remedy the situation. In the latter cases, many of the customers who complained post to the bureau’s website after the fact saying Phobio resolved their issues with fixed trade-in values or Apple Store gift cards to make up the difference.

In a tour of one of its so-called aggregation facilities posted to LinkedIn last month, a Phobio representative shed some light on how Apple products are evaluated. “We have very simple grading criteria. We only have two of course, which is working and damaged to make it easy for folks at home to grade their own devices,” the representative explains, before transitioning to a Phobio employee inspecting a MacBook. “He’s making sure the screen is intact and functional, he’s making sure the keys function, and then he’s checking to see if there’s any wear or tear to the computer or any major dents or damage.”

“A couple of other things to look out for: LCD damage, screen spotting and dead pixels, cracked screen, missing or malfunctioning buttons, and large dents,” the representative says. When asked by Wakeling, Phobio’s CEO who appears on-screen at the beginning and end of the video, what the top issues are with devices sent in for trade-in, the representative simply says “screen delamination” or “any major damage” to the device.

In a Phobio inspection guideline document posted online for business trade-ins (which may have different standards than consumer trade-ins), the company details its processes for inspecting products like iPhones and Macs. Under the display portion, the document says “a device is considered ‘Damaged’ if the display: is cracked, fractured and/or shows signs of delamination; does not function as designed (displaying single colors, lines, flickering); is scratched such that it affects readability.”

However, no mention of white spots can be found in the document, nor did Phobio mention that issue in its facility tour.

You could chalk up these bad customer experiences with Phobio to the sheer volume of products Apple’s trade-in program likely deals in or discrepancies in the level of diligence of its individual employees. But that doesn’t explain the mystery of the white spots, and why we’ve seen perfectly functional MacBook computers have their trade-in value cut in half — or more.

What we do know about the white spots scenario is that it typically involves an Apple laptop in seemingly good condition quoted at one price, only for the trade-in estimate to be knocked down by more than 50 percent upon inspection. The common response from Phobio is that the display suffers from “3 or more white spots.” In McGloin’s case, these apparent spots were not detectable by a human eye before or after Phobio inspected the device. It doesn’t add up.

So we felt it necessary to ask Phobio if they had a reasonable explanation for cases like these that went beyond the standard “screen spotting,” “dead pixels,” and other general LCD damage that would be perceptible by looking at the screen yourself.

Phobio did not have a media contact line or any other form of public-facing public relations department we were able to locate for this story. We did, however, contact a third-party PR representative for Phobio, who forwarded our questions to the company. We repeatedly asked for the opportunity to speak on the record with an official Phobio representative about our findings, but we were ultimately denied. We instead sent a series of questions.

Phobio would not comment directly on the white spots issue, and it would not offer an explanation as to what tools it uses to evaluate MacBook displays or why it seems some customers have had their trade-in quotes adjusted because of the alleged white spots.

When asked, Phobio would not say how long it’s been Apple’s trade-in partner or if it is Apple’s only US trade-in partner, and the company would not comment on the financial terms of its contract, including whether Phobio or Apple gets to keep and resell the devices customers send in. Phobio would also not say whether it receives any guidance from Apple on how to inspect products and make adjustments to trade-in quotes.

Phobio would also not tell us how frequently it negatively adjusted Apple trade-in quotes by up to or more than half. It would also not say how often customers accept these lowered adjustments versus rejecting them and asking for the product back.

In the end, Phobio would only provide this statement:

We carefully assess each device sent to us, and only change the initial quote if the device we receive or its condition differs from what was initially indicated by the customer. We document our findings at every step of the way with photos that are shared with the customers. The customer can then agree to the revised quote, or if they do not, we express ship it back to them at our expense.

We specifically train our support team to see the trade from the point of view of the customer, with empathy, and to advocate for the customer. If devices are damaged in transit or we make a mistake in the inspection, we seek to fix it immediately. We strongly believe in giving full and fair value to customers for their trade ins. This helps fuel the circular economy, and sustainability, and it is part of our corporate purpose.

Apple declined to comment further.

As for McGloin, he’s not sure what’s he’s going to do now with his returned MacBook. “I actually have no idea. I’m not really aware of alternative trade-in options,” he says, adding that he has in the past opted to donate used products or gifted them to a friend.

For now, the computer sits packed up in Phobio’s shipping box, with no visible white spots and no explanation as to how a perfectly functional Apple laptop from four years ago could now be considered worth less than a pair of AirPods.