Selling a stolen phone within the U.S. is a dicey proposition, because there's always a chance the robbery victim called her carrier and had the phone deactivated. That doesn't stop thieves from trying: Many circumvent the carriers' anti-theft features by hacking into the phone to change its serial number; others bamboozle their customers by selling phones that are inoperable. Still, it's become more common — and profitable — to ship stolen phones overseas, where they can easily be resold and assigned a new service contract.

The phones fenced at Seventh and Market will often wind up in the hands of an underground broker or wholesaler, who will export them in bulk. They're sewn into suitcases or jacket linings, secreted onto planes, and taken to other countries, where the cost of legally imported gadgetry is higher — partly because of tariffs, but mostly because U.S. tech companies don't subsidize foreign telecom carriers. IPhones, for example, are prohibitively expensive in parts of Asia and the Middle East, according to data collected by the international price index Mobile Unlocked. An iPhone 5S that costs $707 in the US will run $1,090 in Jordan and $1,196 in Brazil if it's sold through official channels. In China — which, ironically, harbors most of the factories where Apple products are manufactured — the same iPhone goes for $868, if it's sold legally.

Exorbitant retail prices have raised demand for black market merchandise, since stolen inventory is cheaper and easy to conceal. Once a pilfered phone is repackaged, no one can trace its provenance. It can be placed in a display window alongside any newly-manufactured Apple product. It's become the conventional wisdom that any phone sold at a brick-and-mortar store overseas might have been stolen from a U.S. citizen.

DA Gascon discusses kill-switches during a 2013 press conference in New York.
AP Photo/Bebeto Matthews, File
DA Gascon discusses kill-switches during a 2013 press conference in New York.
Sen. Mark Leno helped make smartphone theft a misdemeanor. Now he's trying to eradicate it.
Sen. Mark Leno helped make smartphone theft a misdemeanor. Now he's trying to eradicate it.

While the global black market for smartphones is vast and byzantine, law enforcement has reason to believe that part of it originates in San Francisco — a dense city with tons of pedestrians, battalions of tech workers, and a few sophisticated crime networks.

In November 2012, San Francisco police busted brothers Henry and Victor Gamboa for allegedly running a fence out of their apartment in the Tenderloin with more than $500,000 in stolen property, including 100 cellphones. Investigators suspect the Gamboas were part of a much larger ring, and that the goods — which were procured from auto burglaries throughout San Francisco and Oakland — were being shipped overseas. In December of that year, police busted another electronics fencing operation in the Excelsior, allegedly run by Hung Huynh and Heriberto Cardenas. Police say Cardenas was routing items to Mexico.

The market for stolen cellphones has swelled so much in Colombia — a country traditionally known for drug-trafficking — that many cartels are now smuggling Apple devices and Galaxy 5s instead of narcotics, because there's less risk in the gadget trade. A recent Huffington Post investigation showed Colombian police struggling to keep tabs on this new contraband network, even as they crack down on international drug sales. So far, the Colombian government has tackled the problem with grisly public service announcements, which show blood seeping out of stolen iPhones.

"Comprar un cellular robado es cargar con un muerto," the ads warn: Buy a stolen cell phone; carry a corpse.

In February of this year, DA Gascón and state Sen. Mark Leno unveiled a legislative salvo for San Francisco's smartphone theft epidemic. Senate Bill 962 would require every smartphone and tablet sold in California to come equipped with a kill-switch, beginning in 2015. That, the authors believe, would be enough to deter most criminals.

No state has ever passed such a law, so Leno and Gascón have to cite different historical antecedents to substantiate their claims. The closest analogue might be car theft laws passed in the 1980s and '90s, which tightened penalties for carjacking and burglary, but also required manufacturers to install antitheft devices, or inscribe vehicle identification numbers on their auto parts. The laws were successful: Studies by the National Highway Traffic Safety Administration showed substantial theft reduction in car lines with preventative equipment or marked parts.

Leno and Gascón hope to see similar results in the smartphone industry, as do their legislative counterparts in New York, Minnesota, and Illinois, who all have similar proposals in the works. And so far, California's kill-switch bill seems to have a tide of support behind it. On April 1, it cleared the Senate Energy, Utilities, and Communications Committee by a 6-2 vote, prompting a spate of jubilant press releases from Leno's top brass.

"Our proposal eliminates the financial motive behind this crime, which will help curb thefts and protect the safety of smartphone users," the senator trumpeted in a canned statement. "This is a crime of convenience. End the convenience. End the crime."

For a state in which smartphone capers have surpassed all other forms of robbery, the idea didn't seem profoundly controversial — until industry representatives stepped in. It turns out Leno and Gascón face opposition from cellphone carriers and tech companies — even the ones that previously paid lip service to the idea of theft prevention.

Representatives of the CTIA declined to comment for this story. Instead, the association emailed a prepared statement from its senior vice president and general counsel Michael Altschul, who derides kill-switch features as a "trap door" for hackers and cyber-criminals. Some privacy stalwarts have floated the same theory, arguing that if a citizen can turn off his device remotely, the government can too. As one InformationWeek blogger noted, that could "hasten the arrival of the Surveillance of Everything."

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14 comments
mikerice0
mikerice0

"The only solution, Leno and Gascón argue, is to have kill-switches hardwired so that no network can reactivate a stolen device — no matter where it goes, it's useless."  Fine so far, Gentleman.  But having gone this drastic distance, what will it take for a consumer to reactivate this expensive piece of  hardware/software? An entire bureaucracy run by someone, at some expense, that's what. "Hardwired" above is just a writer's expression suggesting difficulty in reactivating.The writer means the fix is so severe, so un-hackable, that it will take some doing to restore life to the smartphone.  All this costs money.  Who's going to pay the costs?  The consumer is, that's who!  I've read 4 news stories about smartphone theft so far.  It seems as though most theft outside of major cities is small time and unorganized.  The "Find My IPhone App" sounds like a more cost conscious and workable solution to me.  Taxpayers are saddles with 911, a solution that seemed a simple right answer at one time.  911 has mushroomed into a multibillion dollar nationwide bureaucracy to solve a problem speed dialers in phones could have handled nicely, thank you.

dandelion
dandelion

I worked for AT&T for three years.  I was there the day the first iPhone launched.  After that day, 90% of my work consisted of fielding calls from people regarding stolen phones.  I spoke to people who were mugged, robbed, held at gun point and beaten - all for iPhones.  All day long, every day.  I spoke to people who had their iPhones stolen, then the junkies who stole the phones then held the phones "ransom" demanding the rightful owners pay for phones to be returned.  I heard these stories all day long.  All day, every day.


AT&T, the other carriers and Apple have BLOOD on their hands.  They could have stopped this from happening on day one of the launch, but they didn't.  Because that blood is GREEN.


What is the first thing you want to do after your iPhone goes missing?  Well, you want a new one of course.  


Parents: I have a special message for you:


1) Your child does not NEED an iPhone.  Oh, your child thinks they need an iPhone, but guess what, they do not.  


2) When you give your child an iPhone, in addition to unmonitored internet access, you give your child a FANTASTIC sense of entitlement.


3) When you give your child an iPhone (or other smartphone / tablet), there is an almost 100% chance that the device will be lost, stolen or damaged in the first year.  I know.  I am the one who listened to all those parents crying about the phone stolen at the track meet, stolen out of the band room, stolen at gun point.  I listened while parents told me how their child was beat up for their iPhone.  I listened while parents told me that their daughter's "best friend" stole the iPhone.  I listened while the parents complained about how the child cracked the screen, dropped it in the toilet, went swimming in the ocean with their iPhone.


Then I listened to the parent have a fit when I told them iPhone number two would cost full price.  Then I placed the order for the parent when they paid full price for iPhone number two.


My son got his first phone this year.  He got an old school slider.  He stood in Best Buy and cried, told me it was terrible that he couldn't get an iPhone.  That was a couple of months ago.  He's doing ok today.  No major psychological trauma from being forced to carrying around a piece of crap phone.  Massive sense of entitlement... under control.  I've got no fear he will be robbed or beaten for his slider.  When he loses it or breaks it, he will be able to cough up $40 of allowance money to replace it.  

Jesus Valencia
Jesus Valencia

That's capitalism for Yaaa , buy , sell , trade , STEAL!!!!

rob035
rob035

another BAD BART COP !

matters
matters

Fascinating article. I will be keeping my phone out of sight on the streets and on public trans.

Thank you!

njbartlett
njbartlett

"Britain had been flagging stolen phones on a national database for years; U.S. companies, with their superior engineering and surfeit of resources, could certainly do much better."

Well that's kind of insulting.

savagejunglebeast
savagejunglebeast

My daughter was robbed at gunpoint, on the way to school at 18th and Noe. We recovered her iPhone because we had "find my iPhone" installed, and the cops arrested a random bag man at the 16th Street BART station. Now that my daughter knows that we can track her location, she's turned "find my iPhone" off.

aliasetc
aliasetc topcommenter

Australia will brick a stolen phone making it useless. Here in the good old USA the cellular companies have bribed and paid off to prevent such laws in the name of profit.

tvhandy
tvhandy

I just had my iPhone 5s stolen sometime Monday morning from a hotel room my friends and I were sharing in Palm Springs for Coachella. As soon as I discovered the phone missing, I immediately opened up the Find My iPhone app on my brother's phone to discovered it was taken by a tweeker to what was described to us as one of the worst crack motel in Palm Springs, a place we were advised not to approach without the protection of the local cops. Tired, and eager to leave Palm Springs we checked out of our hotel and drove the mile up the road to this crack hotel to find my phone.


When we arrived to this crack hotel we approached the first people we saw and asked them if they knew of anyone that could have taken the phone. They declined any knowledge of the incident and warned us of several of the residents of the property. This didn't intimidate my brother and I as we continued on with our search with the help of the friendly, toothless property manager. 


After about 10 minutes of walking around the small complex utilizing the Find My iPhone by requesting it to force my phone to play a sound as we walked door to door at the chance we'd hear it. This proved to be ineffective and were on the verge of giving up until a youthful, strung out man appeared from a room curious of our presences. After a brief introduction from the property manager, we quickly barter with the man a reward if he could track down the iPhone. He quickly accepted and went room to room inquiring about the phone until quickly returned with a women who had "bought" the phone from a man at 7-Eleven for $80. 


I quickly grabbed the phone, turned it on to examine the phone, ensure that it was mine, which it was, and handed the pair a $20 bill I had in my wallet and quickly made my way back to my friend's car who was waiting nervously in the parking lot had we need to make a quick get away. 


We quickly took off heading west on HWY 111 towards Los Angeles feeling mighty accomplished in our ability to track down & recover my iPhone in less then 2 hours after discovering it's disappearance. 

ki11a
ki11a

@tvhandy  I will take things that never happened Alex, for 200...

Flick666
Flick666

@tvhandy  Dude, those were the thieves and you gave them $20. You only encouraged them to do it again. Apple is NOT your friend. They are perpetuating all this misery!

tvhandy
tvhandy

@Flick666 I'm more concerned over how the person was able to enter the hotel's property & the lack of security cameras, then I am about loosing $20 when the cost to replace the iPhone is much greater ($749). 



 
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