Security & Fraud

Black Market Demand Fuels Mobile ID Fraud

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The demand for U.S. smartphones on the black market overseas is at an all-time high.

According to law enforcement officials, criminals are using new fraud schemes and identity theft in order to acquire devices in bulk and drive up the profitability of the illegal foreign networks they are being sold on.

As The Wall Street Journal reported Monday (Dec. 14), street-level smartphone theft has become less lucrative due to more mobile devices being equipped with remote kill switches, forcing fraudsters to instead utilize fake credit cards, shell corporations, stolen information and other methods to pilfer devices from U.S. carriers.

In most cases, these devices are quickly moved to foreign black markets, in locations like the Middle East and China, where they are unable to be retrieved.

State and federal investigators estimate that the profits for reselling the latest smartphone models overseas can reach as much as $500 to $1,000 or more per device, WSJ said.

Earlier this year, a Consumer Reports study revealed data that proved the same technology that allows mobile device owners to protect their information by wiping data or disabling a phone remotely (kill switches) has also decreased the overall number of reported instances of smartphone theft in the U.S.

“Phone theft used to be a growth industry. The snatch-and-run stealing of iPhones even had its own clever moniker: Apple picking,” Consumer Reports explained. “But such thefts might be in decline.”

The organization’s research shows a decrease in the number of phones stolen by almost 1 million, reporting 2.1 million Americans had phones stolen last year, down from 3.1 million in 2013.

Apple was an early adopter of the built-in security technology, offering the ability to shut down an iPhone to its Find My iPhone app in 2013. With the launch of the iPhone 6 and iPhone 6 Plus last year, the “Activation Lock” became a default feature.

“The kill switch was a great incremental help to the problem that made it less profitable for these street robberies to occur,” Lou Stephens, special agent in charge of the U.S. Secret Service Minneapolis field office, told WSJ. “But more of the problem has migrated to fraud.”

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