3.1 million smartphones were stolen in the United States in 2013. As the number of smartphones out there continues to climb that number is sure to get higher. So what actually happens to your stolen phone?
Matt Shaer took on that question for the latest edition of Wired and for the run-of-the-mill petty thief who steals a phone out of your hand or bag it typically gets resold for profit either at a second hand shop or on eBay (EBAY).
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Manufacturers like Apple (AAPL) and Samsung have beefed up security features like “Activation Lock” that, in theory, make it harder for someone to take your phone, reset it and resell ready to use. These are software-based fixes. What the Apple’s and Samsungs' of the world haven’t done is find a way to make the hardware itself a theft deterrent, thus putting a stop to the real problem in the rapidly growing smartphone industry: large scale organized crime.
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“The thief who steals your phone with you coming out of the subway is stealing one or two phones maybe every month,” Shaer told Yahoo Finance, “where as organized crime rackets - those are big numbers - pallets of smartphones that are being shipped overseas.”
Those phones usually end up in Asia or Africa, markets where smartphones aren’t always available. The contraband fetches a hefty sum in these markets and the organizations that steal the phones stand to make a lot of money from the transaction.
“There was a network that was disturbed in October by ICE - immigration - and they thought they had disrupted a ring that was generating about two million dollars a year,” Shaer explains.
These phone mafias usually get phones in large numbers either by hijacking a store shipment or setting up an elaborate network of credit mules, in which they pay unsuspecting consumers to buy a phone on contract and then cancel that contract. What the “mules” don’t realize is that they are expected to give the phone back when they cancel the contract. By then the phones are in the hands of the thieves and the consumers are on the hook for a sizable chunk of cash.
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Shaer says the structure of these criminal organizations are akin to traditional drug running operations. “There’s somebody at the top - a kingpin if you will - and then there are lower level folks who deal with obtaining the phones.”
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