10% of cellular users said their phone had been stolen at one point.

From San Francisco to Washington, D.C., law enforcement agencies are again sounding an alarm over mobile-phone thefts, demanding that the wireless industry, resellers and lawmakers take new steps to quash the thriving black market for boosted devices.




San Francisco District Attorney George Gascón recently held an acrimonious conference call with the nation’s largest wireless carriers and their lobbyists. “They refused to even entertain the idea of a technological solution to this,” Gascón said about the February call. “I told them in no uncertain terms that I believed they were motivated by profit and not social responsibility.” He plans to meet this week with representatives of Apple, maker of the iPhone, which is a major target of cellular thieves, to press his case for new technology that would allow phones to be permanently disabled after a theft.

In Washington, police chief Cathy Lanier says new federal laws are needed to mandate that all wireless carriers participate in new database systems that make it difficult to resubscribe stolen phones to cellular service. She is also pushing to shut down third-party buyers and resellers of phones, which she blames in part for a recent uptick in cell-phone crime reports in Washington. “Everybody is making money off the victims of street crime,” she said. “So it’s just very frustrating.”

Cell-phone theft in major cities has become a national crime epidemic, like the car-stereo crime wave of the 1990s. In San Francisco, about half of all robberies now involve mobile phones, and in New York City there was a 40% increase in mobile thefts in 2012. One recent Harris poll found that nearly 10% of cellular users said their phone had been stolen at one point.

The reason is simple: the black-market resale value of the devices, like car radios two decades ago, is high. “Your mobile phone is probably the most expensive thing you carry around with you,” says Kevin Mahaffey, a co-founder of Lookout, a mobile-security company. “It’s like holding $400 up to your head.”

Nearly one year ago, law enforcement came together with the nation’s leading cell-phone carriers to make a major dent in the fastest-rising crime epidemic in American cities. They vowed to create a central database where consumers could report stolen phones to prevent them from being reactivated by any major cellular carriers. “Criminals are smart,” said New York Senator Chuck Schumer, who helped broker the deal. “Once they know that the phone is worthless, they’re not going to steal it.”

The database will be completed this fall, with the six largest cellular companies, who command about 90% of the U.S. wireless marketplace, participating. Internationally, at least 88 wireless companies in 43 countries have instituted similar databases, according to GSMA, a wireless trade group. Participating companies agree not to reactivate phones with serial numbers that have been reported stolen, which theoretically would limit their resale value. U.S. carriers have also launched a public-education campaign to encourage consumers to safeguard their phones and to report thefts. “An allegation that our members don’t care about their customers is completely inaccurate,” says Jamie Hastings, a vice president at the CTIA, a trade group for U.S. wireless-service providers and cell-phone manufacturers.

Law-enforcement officials praise the database system as a step in the right direction, but there are also several obvious limitations to the new safeguards. Stolen phones can still be subscribed to carriers not participating in the database, or exported to countries that do not participate. Stolen smartphones can also still be used to connect to wi-fi networks or to run applications without a cellular connection. Finally, the unique serial numbers on phones, called the International Mobile Station Equipment Identity, or IMEI, can be changed after theft, making the database moot. Schumer has introduced a bill in Congress, which has yet to become law, that would make such alterations a domestic crime.

In San Francisco, Gascón has concluded that wireless companies and cell-phone manufactures need to develop new technologies that would allow phones to be permanently disabled remotely after a theft. There are programs on the market that allow users to remotely lock, locate or sound an alarm on their phones after thefts, but nothing that permanently disables the device, says Maheffey. But the mobile industry has yet to show interest in such a solution. “It was very obvious to me that the industry feels that they have done everything that they can do,” Gascón said after the conference call.

Meanwhile, Lanier says, third-party companies are popping up that can make it easier for criminals to make money from stolen phones. One such company, she says, is ecoATM, which has machines in the Washington area where people can exchange old cell phones for cash without interacting with a person.

On the company website, ecoATM describes in some detail the steps it takes to prevent thieves from using its service. The machine requires a scan of a valid driver’s license and the scan of a valid thumbprint from the seller. The company also checks if the serial number of the phone has been reported stolen, then holds the phone for 30 days in case it is reported stolen. The website says that “ecoATM works hard to ensure that our kiosks are the worst possible option for a criminal to sell stolen property and the best place for the victim’s property to end up if it was stolen because we can track and return it.” Like other resellers of used phones, a portion of the phones collected by ecoATM are resold overseas, where phones can retail for more, since their costs are not subsidized by wireless carriers.

Lanier says the safeguards are not enough to stop thieves from using the machines to cash in on crime. “I have been going to battle with them,” she says of the companies offering to buy used phones.

The rash of car-stereo thefts in the 1990s, which now seems like ancient history, may provide some lessons for how the cell-phone-theft wave will die down. Criminologists credit the decline to the decision of car manufacturers to install higher-quality stereos at the factory. This dried up the market for custom car stereos, which in turn dried up the black market for stolen stereos. Only time can tell what combination of new regulations and new technologies ends the current thriving black market for stolen cell phones.

Photo credit: The Viking Logue

Via Time