How can a faulty USB charger kill you?

This was one of those crap Chinese-made Mains-to-USB chargers that can be purchased for as little as US$1.50.

I've taken them apart, and they are bad, criminally bad. The isolation from mains to output is not taken seriously- not enough creepage distance, and in one of the samples I examined, there was debris inside that could cause a direct short if you shook the charger just right.

She could have been touching the earphone plug while unplugging or plugging the earphones into the phone, and perhaps a grounded Ethernet port on an otherwise plastic computer. Once you're connected to the mains, any grounded bit of metal can be lethal. Perhaps the computer was metal and grounded.. most laptops these days have a grounded chassis so either the metal, trim, an exposed screw or anything like that would suffice. Whatever the current path, the muscle contractions probably caused her to grip the conductive bits more tightly rather than flinging them away, and sealed her fate.

What likely happened was that the adapter failed such that the USB ground became hot, which, since it is tied to the phone's chassis ground, made the chassis also mains potential. Since the laptop was aluminum and grounded, she completed a circuit by touching her phone and laptop simultaneously.

Cheapo adapters often forego safety certifications that require certain clearances between main and neutral and ground lines so that they do not contact. A component failure in one of these products could easily bridge a hot line.

Seriously some of these things are scary.

Most of the answers here (while correctly lambasting the low-quality phone charger that energized its output cable to live/phase level) elided this (crucial) part of the question:

And wouldn't the Laptop charger not be faulty aswell then? How would it allow the current from the phone charger to flow back into the outlet and complete the circuit? Shouldn't the Laptop charger isolate the mains from the DC output circuit?

Actually, the laptop charger sometimes has ground-earth connection by design. On one of mine (HP-branded so carrying umpteen world-wide approval seals), it explicitly says "connect only to grounded outlet".

Now this particular charger (model PA-1650-02H) does not have a IEC60950-1 class II mark (square on square) on it. That strongly suggests its output ground is connected to earth ground (in order to comply with the safety regs for class I devices). And measuring with an ohm-meter the resistance between its output ground/negative pin and its input earth prong, I get a value close to 0 ohms (within the error margin for my meter). So, yeah, there are laptop adapters and laptops that have their DC supply (negative pole) earthed by design. And the DC supply's negative pole is connected to the laptop's ground plane. Even on a plastic-case laptop (like mine), the headphone and mic jacks for example have enough exposed outer metal ring to make a connection with the hand/finger possible.