Smartphone Black Market Thrives, Criminals Turn to Fraud, ID Theft


Amid a thriving and highly profitable black market overseas for smartphones, criminals are turning to fraud and identity theft to obtain discounted devices in bulk, reports the Wall Street Journal. Authorities say the kill switch, which remotely deactivates stolen phones, has made street-level smartphone theft less lucrative. Joint investigations by state and federal authorities in Minnesota, Michigan and Georgia have uncovered vast networks of criminals who use stolen information, fake credit cards and dummy corporations, among other means, to obtain discounted phones in bulk from U.S. carriers. The phones are often then resold for use on foreign networks, including in China and the Middle East, where U.S. carriers can't find them.

Profit on the resale of new smartphone? models? abroad, where phones aren't subsidized by wireless carriers, can amount to $500 to $1,000 per phone or more, state and federal investigators say. California passed a law this year, the first of its kind, requiring manufacturers to sell smartphones with kill switches, or activation locks, enabled by default. Since the introduction of kill switches by Apple Inc. in September 2013, authorities have credited the them with reducing iPhone robbery in cities like San Francisco, New York and London. An antitheft feature for Android phones was introduced earlier this year. “The kill switch was a great incremental help to the problem that made it less profitable for these street robberies to occur,” said Lou Stephens, special agent in charge of U.S. Secret Service Minneapolis field office. “But more of the problem has migrated to fraud.”

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