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Smartphones: Shrinking Prices and Rising Thefts

Mobile phones have come a long way, both in price and functionality, since the first one was available for sale in 1982. In 1982, the essence in mobility was the Motorola Dynatec, a mobile device one foot long and weighing two pounds with a battery capable of up to one hour of talk time. The retail price for the Dynatec was $3,995. Since then, functionality has increased so dramatically, and the prices have become so affordable, that there are currently 166 million smartphones in use in the United States with 68.8 percent of adults owning at least one.1

The growth of smartphone use is not without its negative effects. Last year 3.1 million smartphones were stolen in the United States, nearly double the number stolen in 2012.2 Stealing smartphones is a very lucrative operation for thieves, especially for the wealth of financial information people store on their phones, thanks in large part to the readily available banking apps. Additionally, the device itself has a high resale value on the international black market.

Yet, despite these alarming statistics, a recent survey found one-third of smartphone users were not taking even the simplest precautions against device theft. Only 36 percent of smartphone users set a screen lock with at least a four-digit PIN, with a mere 11 percent using a PIN longer than four digits.3 Further, only seven percent used security features other than screen locks, such as encryption.

To combat these thefts, the Big Four carriers: Verizon, Sprint, AT&T and T-Mobile, urged on by the Federal Communications Commission (FCC) and law enforcement agencies, developed a national database of unique identification numbers (known in the industry as International Mobile Equipment Identities, or IMEIs) of cell phones reported stolen. The database went “live” in late 2013, but many in law enforcement argue the database is ineffective because many stolen phones are shipped overseas beyond the reach of the database. Further, new IMEIs can be programmed into stolen smartphones by special software.

Faced with the rising theft statistics, federal and state legislators and policymakers began demanding that smartphone manufacturers provide a “kill switch.” Kill switch software provides the ability to make the smartphone inoperable if it is stolen by remotely wiping all information contained on the phone and locking it, thereby preventing the reactivation of the smartphone unless the authorized user approves and enters his or her password. On May 14, Minnesota became the first state to require remote disabling of a smartphone when Governor Mark Dayton signed SF 1740 into law. The legislation requires any new smartphone sold or purchased in the state on or after July 1, 2015 to be equipped with kill switch capability, either preloaded or capable of being downloaded at no cost to the user. The law, chaptered as Ch. 241, also allows law enforcement to confiscate any smartphone identified as stolen or as evidence in a criminal case.

Several other states are looking into legislation to counteract smartphone thefts. On August 7, the California Assembly passed S. 962, a bill previously passed by their Senate that not only requires kill switch capability by July 1, 2015, but also directs that it be reversible, so that an authorized user can restore the phone’s essential features. California Governor Jerry Brown signed the bill into law on Aug. 25. Earlier this year, similar bills were introduced in both the Illinois (SB 3539) and New York (A8984) legislatures.

Likewise, a “kill switch” bill has also been introduced in the U.S. Congress. On Feb. 14, the Smartphone Theft Prevention Act was introduced in the U.S. Senate by Sen. Amy Klobuchar (D-MN) as S. 2032 and in the U.S. House by Rep. José Serrano (D-NY) as H.R. 4065. As with much legislation in this Congress, both bills were referred to committee and have gone nowhere.

Although some of the above legislative efforts have faltered, an effort that has proved very effective is the “Secure Our Smartphones” (S.O.S.) initiative, In late 2013, 39 state and territorial attorneys general signed an S.O.S. initiative letter urging leading smartphone manufacturers to develop a technological means to protect smartphone users by drying up secondary markets for stolen phones. The initiative is an international coalition co-chaired by New York Attorney General Eric Schneiderman, San Francisco District Attorney George Gascon and London Mayor Boris Johnson to encourage the industry to implement a solution to the rampant robberies of mobile communications devices, widely known as “Apple picking.” The initiative signatories include several police chiefs, mayors, professors, state legislators and members of Congress.

The cumulative effect of all of the above efforts resulted in an announcement by CTIA – the Wireless Association on April 15 of the “Smartphone Anti-Theft Voluntary Commitment” in which all participating carriers agreed that new smartphone models manufactured after July 2015 for retail sale in the United States will provide, at no cost to the user, a preloaded or downloadable anti-theft tool. That tool will have the capability to:

  1. remotely wipe the authorized user’s data if the phone is lost or stolen;
  2. render the phone inoperable to an unauthorized user, such as by locking it so it cannot be used without a password or PIN;
  3. prevent reactivation without the permission of the authorized user; and
  4. reverse the inoperability if the smartphone is recovered by the authorized user and restore user data to the extent feasible, such as restoring data from the cloud.

The participating carriers are: Apple Inc.; AT&T; Google Inc.; HTC America, Inc.; Huawei Device USA; LG Electronics MobileComm USA, Inc.; Motorola Mobility LLC; Microsoft Corporation; Nokia, Inc.; Samsung Telecommunications America L.P.; Sprint Corporation; T-Mobile USA; U.S. Cellular; and Verizon Wireless.

So it appears law enforcement, policy makers and consumers have accomplished their goal of finding a solution to the proliferating thefts of smartphones. The wireless industry has won, too, since in order to get the anti-theft feature we will all have to buy new smartphones next July.

[1] comScore Mobile Marketing Watch Report, May 7, 2014.

[2] 2014 Annual State of the Net Survey, Consumer Reports National Research Center, May 2014.

[3] Ibid.

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Tim Fox, Montana Attorney General

Tim Fox, the Montana attorney general, has worked in public service since 1990.