Is AppleCare Transferable on iPhones? A friend of mine purchased an iPhone 5 a couple of months ago which she now wishes to sell. She said she has contacted Apple with regards to the AppleCare warranty and selling her iPhone and was informed that the AppleCare that was purchased with the handset cannot be transferred to the new owner OR to a new iPhone 5S.

She would like to know is this true (and isn't it therefore a rip off), as she is only a couple of months into the agreement and therefore would think twice about upgrading at all ?
AppleCare protects the item and is fully transferable to any new owner of that existing phone. Also, the full terms and conditions are at apple.com/legal in case your country specific details differ from the USA. 

You can also cancel AppleCare for a pro-rated refund at any time so if after three months, you wanted to sell your iPhone 5 to someone that didn't want to pay for AppleCare coverage - you could get the majority of the cost back.

I agree with what you reported, you can't in general just move AppleCare to another device whether it's the same owner or a different owner. The move in that case is to get a refund in my opinion. The power to decide is in your friend's choice - sell the iPhone 5 with coverage if that raises the sale price (or value to the next owner) or get a refund which will defray all but the few months of coverage that has been used when buying coverage for the iPhone 5s.