Prosecutor Says Wireless Carriers Blocking A Simple Solution To Phone Theft

November 22, 2013  |  


Some news stories actually make you want to start believing in conspiracy theories. Here’s one that might. It seems that wireless carriers may be blocking a relatively simple solution to phone thefts in order to make a profit. About 1.6 million Americans had their phones stolen last year, with nearly 40 percent of all robberies in major U.S. cities involving mobile devices.

Not only do people buy more phones is they need to replace stolen ones, but also customers are more apt to opt for insurance offered by phone companies.

This is actually a lucrative side hustle for carriers — the top four wireless carriers will earn more than $7.8 billion this year in insurance premiums from their customers, according to an estimate by industry trade publication Warranty Week (via Huffington Post). According to Businessweek, Asurion, a phone insurance company that pays the wireless carriers for each policy they sell, made an estimated $98 million in profit in 2010. Typically, phone insurance plans range between $7 and $11 monthly, and they require consumers to pay deductibles as high as $200 for a replacement phone. And most often, these are nor new phones but refurbished used phones ones. Asurion’s insurance plan doesn’t guarantee customers will receive the same model as the one they lost.

“If you do the math, the phone companies are making out like bandits,” Richard Doherty, a director for Envisioneering Group, a market research firm, told HuffPo.

But here’s the kicker. A top prosecutor is accusing phone companies of standing in the way of a solution that could protect consumers from violent robberies just so that they can make more money.

San Francisco District Attorney George Gascón claims he has obtained emails showing how phone companies are blocking the introduction of a so-called kill switch that would render phones inoperable if stolen. If installed on phones, it would undercut the value of phones being sold on a global black market, which would lead to a sharp reduction in thefts.

“These emails suggest that the carriers are rejecting a technological solution so they can continue to shake down their customers for billions of dollars in insurance premiums,” Gascón said in a statement. “I’m incensed. … This is a solution that has the potential to end the victimization of their customers.”

Gascón and New York Attorney General Eric Schneiderman have now demanded that phone manufacturers create new smartphone technology to make the devices less attractive to thieves. Apple and Samsung have already introduced new features this summer that they said would render stolen devices useless.

Phone companies have “worked hard over the last year to help law enforcement with its stolen phone problem,” the CTIA said in a statement, pointing out that a new database of phone serial numbers is being shared among carriers. Last year, wireless companies agreed to share serial numbers after being pressured by the Federal Communications Commission and police chiefs nationwide to reduce cell phone thefts.

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