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Decline of Stolen Phones Market Spurs Market for Certified Renewed Devices

Mon, 10/29/2012 - 5:44am
Perry LaForge, DRF

Before this decade is over, refurbished mobile phones could be one-fifth of all handsets sold in the U.S. market, according to ReCellular, one of the industry’s largest refurbishers. But as impressive as that statistic is, it’s a mistake to overlook a trend that threatens to prevent the renewed device market from living up to that potential: the growing number of stolen phones, tablets and other mobile devices. Perry LaForge

By the time you finish reading this paragraph, a few hundred mobile phones will have been stolen. In the U.S. alone, 113 handsets are stolen every minute. In fact, mobile phone thefts now account for 30 to 40 percent of all robberies, and the percentage is even higher in major global cities such as New York, the FCC says.

Responding to mobile phone thefts consume already limited law enforcement resources – so much so that several police chiefs have lobbied the FCC, handset vendors and mobile operators to develop a solution to minimize thefts.

“I hear 15 stories or so every morning in my crime briefings,” D.C. Police Chief Cathy L. Lanier told The Washington Post earlier this year. “We are being clobbered with these robberies and they’re looking for the same thing. They say: ‘Give me your purse. Now where is your phone?’

“This is a national issue. We have done all we can at the local level.”

She’s right to a degree. The problem can’t be effectively addressed at the local level, but it can’t be resolved at the national level, either. For example, although a U.K. initiative has been successful by remotely deactivating stolen phones to undermine the black market for them, its effectiveness stops at that country’s borders.

The most effective remedy is a global solution, one that spans all countries and all members of the wireless ecosystem: operators, device vendors, independent dealers and refurbishment companies. To enable that kind of global anti-theft program, BrightStar, the CDG, eRecyclingCorps, ModusLink Global Solutions, Nexlink Communications, ReCellular, Sprint Nextel, Teleplan International and ValuTech Outsourcing founded the Device Renewal Forum (DRF) in early 2012.  

The DRF is creating an industry-standard framework to increase recycling rates for smartphones, feature phones, USB modems and other wireless devices from their current rate of just 5 percent. This framework will block stolen devices from entering the renewal system, thus drying up the market for stolen phones and making theft financially pointless.

The DRF also will audit facilities where devices are renewed to ensure that all of the anti-theft processes are in place and enforced. Part of this audit process will leverage other initiatives, such as PROTECTS in the United States, to thwart the current problem of devices being stolen in one market and then sold to unscrupulous refurbishers that sell them in other markets. The DRF will provide a single, global, industry-standard set of safeguards to keep stolen devices out of the renewal system.

Mobile operators currently maintain their own individual databases of devices that their customers have reported stolen. The DRF will provides yet another layer of anti-theft deterrent by linking those databases to provide a global clearinghouse, the kind that makes it fast and convenient to identify stolen devices so they can be immediately removed from the renewal system.

Thwarting Identity Theft

By undermining the market for stolen phones, the DRF will address another problem: the theft of credit card information, contacts, logins for websites and apps, confidential messages and other personal information stored on those phones. This problem is a growing concern for enterprises and consumers alike.

For example, mobile phones are increasingly facilitating cashless payments via technologies such as Near Field Communications (NFC). Many enterprises, meanwhile, provide their employees with tablets, smartphones and feature phones, and in some cases allow them to bring their own device for use at work.

In all of these examples, a theft goes beyond the replacement cost of the device itself. There’s also the cost and aggravation of having payment information, company contacts and other sensitive information falling into the wrong hands. At the very least, the consumer, the employee or the employer has to spend time cancelling accounts, changing passwords and doing other things to mitigate the risk of identity theft, blackmail or industrial espionage.

The DRF will minimize those problems by minimizing the black market for stolen phones. As a result, the DRF will help grow the market for cashless payments – and thus the business opportunity for mobile operators and other ecosystem members – by making the fear of identity theft less of a barrier to adoption.

As device thieves and other members of the black market realize that stolen phones can be verified, the market will dwindle. That in turn will minimize the crime wave – a win-win for consumers, enterprises, law enforcement, mobile operators, insurance companies and just about everyone else. The DRF is the only organization with the global reach necessary to achieve this goal, which is key for ensuring that the market for certified renewed devices will live up to its potential.

Perry LaForge is the Chairman of the DRF.

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