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Cellphone Thefts Grow, but the Industry Looks the Other Way

Brian X. Chen and Malia Wollan
Thursday, 2 May 2013 | 12:13 PM ET
Rose Cha, second from left, who's had her cellphone stolen three times, in New York.
Michael Nagle | The New York Times
Rose Cha, second from left, who's had her cellphone stolen three times, in New York.

When a teenage boy snatched the iPhone out of Rose Cha's hand at a bus stop in the Bronx in March, she reported the theft to her carrier and to the police—just as she had done two other times when she was the victim of cellphone theft. Again, the police said they could not help her.

Ms. Cha's phone was entered in a new nationwide database for stolen cellphones, which tracks a phone's unique identifying number to prevent it from being activated, theoretically discouraging thefts. But police officials say the database has not helped stanch the ever-rising numbers of phone thefts, in part because many stolen phones end up overseas, out of the database's reach, and in part because the identifiers are easily modified.

Some law enforcement authorities, though, say there is a bigger issue—that carriers and handset makers have little incentive to fix the problem.

"The carriers are not innocent in this whole game. They are making profit off this," said Cathy L. Lanier, chief of the police department of the District of Columbia, where a record 1,829 cellphones were taken in robberies last year.

George Gascón, San Francisco's district attorney, says handset makers like Apple should be exploring new technologies that could help prevent theft. In March, he said, he met with an Apple executive, Michael Foulkes, who handles its government relations, to discuss how the company could improve its antitheft technology. But he left the meeting, he said, with no promise that Apple was working to do so.

He added, "Unlike other types of crimes, this is a crime that could be easily fixed with a technological solution."

Apple declined to comment.

(Read More: Apple Avoids Potential $9 Billion Tax Bill)

The cellphone market is hugely lucrative, with the sale of handsets bringing in $69 billion in the United States last year, according to IDC, the research firm. Yet, thefts of smartphones keep increasing, and victims keep replacing them.

In San Francisco last year, nearly half of all robberies involved a cellphone, up from 36 percent the year before; in Washington, cellphones were taken in 42 percent of robberies, a record. In New York, theft of iPhones and iPads last year accounted for 14 percent of all crimes.

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Some compare the epidemic of phone theft to car theft, which was a rampant problem more than a decade ago until auto manufacturers improved antitheft technology.

"If you look at auto theft, it has really plummeted in this country because technology has advanced so much and the manufacturers recognize the importance of it," said Chuck Wexler, the executive director of the Police Executive Research Forum, a nonprofit group focused on improving police techniques. "The cellphone industry has for the most part been in denial. For whatever reasons, it has been slow to move."

Carriers say they have faith in the database, which they created with police departments across the country. They also say they are taking independent steps as well to address the problem. Verizon, for instance, says it has its own stolen phone database, making it impossible for devices reported as stolen to be reactivated on its network.

"We do care very deeply about this," said Jason Young, T-Mobile's vice president of product management. "If you've ever lost a phone or had one stolen, it's a scary thing, it's a painful thing and it's a costly thing."

Apple provides some assistance in locating lost or stolen phones with its free software, Find My iPhone, which can find a missing iPhone or remotely erase its data. But the service does not work once the phone is turned off or disconnected from the Internet. To locate an iPhone, an Apple customer can log in to iCloud.com with a Web browser and see a map of its approximate location, and can then hit a button to erase its information.

Google does not include any software in its Android operating system to help people locate a missing phone, although some third-party Android apps offer the feature. Mr. Gascón of San Francisco said that was not enough. "What I'm talking about is creating a kill switch so that when the phone gets reported stolen, it can be rendered inoperable in any configuration or carrier," he said.

(Read More: This Is the Future for Smartphones: Broadcom CEO)

Some security experts say such solutions are possible. One is software to prevent a phone from working after it is reported stolen, said Kevin Mahaffey, chief technology officer of Lookout, a mobile security firm. There would be ways to work around that, he said, but if companies made it time-consuming and expensive to reactivate a stolen cellphone, then people would stop stealing them so much.

Representative Eliot Engel, Democrat of New York, has proposed a legislative solution. A week ago, he introduced legislation that would make it illegal to modify a phone's identifier, among other preventive measures. In Britain, it is illegal already.

In San Francisco, the resale market for stolen phones is thriving, with a new iPhone netting a thief $400 to $500 in cash, said Edward Santos Jr., a police lieutenant who investigates robberies. The starting price of a new iPhone 5, without a contract, is $650.

Often, stolen phones are moved to a house or storage facility where middlemen erase the phone's memory, Mr. Santos said. Clearing a phone makes it difficult for the police to prove a phone was stolen and to return it to its owner.

In at least one case, Mr. Santos said, people suspected of stealing phones were found to be hacking the phones' unique identifying code, known as an International Mobile Station Equipment Identity, essentially erasing all digital evidence that the phone was stolen. This also makes it possible to reactivate a stolen phone, even after it has been entered into the database. Mr. Santos said he suspected that this kind of modification was widespread.

Some industry experts say consumers should have the right to modify their phones' identification features to avoid being tracked.

The right to change the identification is a "pro-privacy measure," said Seth Schoen, a senior staff technologist at the Electronic Frontier Foundation, a technology-oriented civil liberties group in San Francisco.

In the last six months, San Francisco police have broken up more than half a dozen large-scale stolen electronics operations, uncovering thousands of stolen smartphones as well as laptops in houses and storage units across the Bay Area. In one raid in November, the police found stolen electronics valued at $500,000. The people accused of stealing them told the police they sold their entire inventory every two weeks through flea markets in Oakland, Calif., and by shipping the phones overseas.

Recent cellphone theft cases in San Francisco suggest that many end up as far away as Mexico, Vietnam and China.

The international reach, huge profits and technological expertise of these black market operators suggest possible ties to larger organized crime networks, Mr. Santos said.

"It could be just a bunch of small groups, but these guys are very well organized, very tech savvy, well trained and well funded," he said. "I think it is just a matter of time before we find the mother lode, a warehouse that is just stacked to the ceiling with smartphones."

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