Rising Cellphone Theft Attracts Hill, FCC Attention

Ranking Member Henry Waxman, D-Calif., sent letters to 19 wireless companies, including the major carriers (http://xrl.us/bmy94v). The letters were also signed by Communications Subcommittee Ranking Member Anna Eshoo, D-Calif., and Rep. Ed Markey, D-Mass. “We are writing to learn what policies your company uses to protect consumers,” the members wrote in each letter. “Even simple steps, like remote locking of stolen devices, could make a big difference in deterring theft. ... Without the ability to lock or wipe cell phone memory, victims of cell phone theft not only have to worry about replacing their device, but are also at risk of having their personal and financial information stolen."

A bill introduced Thursday bans wireless carriers from providing service on devices reported stolen. HR-4247 would set up a single national blacklist, maintained by the wireless industry, to record ID numbers of stolen devices. It also would require carriers to enable customers to remotely delete data from their devices. Engel introduced the bill with two other Democrats and it was referred to the House Commerce Committee. “It makes no sense to reward the thief by continuing service on a stolen cell phone,” Engel said. “If service is cut off on a stolen phone, it just becomes a useless brick. The motivation to threaten, or commit violence, in order to steal a phone goes away.” Nearly 70 police chiefs support the bill, Engel’s office said.

The FCC is also watching. “Thefts of mobile devices are growing at an alarming rate, and we are actively working with public safety agencies and wireless carriers on ways to address this issue,” said Genachowski.

The Engel bill and Waxman letters focus on theft of cellphones and do not address mobile devices that are not attached to a carrier network, for example a Wi-Fi-only Apple iPad. “This is specific to devices where the customer has a relationship with the wireless carrier,” an Engel spokesman said. “People who own an iPad or other similar device where they have a data plan qualify. But with a device that doesn’t have a plan and only connects to the internet via Wi-Fi, there is no service to disable or prevent.” The letter’s recipients included Apple, Google, Microsoft and manufacturers, said a Waxman spokeswoman. “So we hope they will address the issue as well.” Waxman, Eshoo and Markey didn’t coordinate the timing of their letter with Engel’s legislation, the Waxman spokeswoman said.

Waxman, Eshoo and Markey sought answers by April 11 to several questions about industry policies on cellphone theft. Among the questions, they asked for views on technology to remotely disable devices, whether companies cooperate with law enforcement to retrieve lost or stolen phones, and whether companies ever reactivate stolen phones with different phone numbers. They also asked for views on Australia’s “blacklisting” program that places cellphones reported stolen on a list so carriers know not to reactivate them.

CTIA Vice President Jot Carpenter said cellphone thefts are a real concern. “The industry takes this issue very seriously and is committed to doing what it can to help reduce the number of handsets that are stolen,” Carpenter said. “CTIA and its member companies have been in active discussions with FCC and law enforcement regarding potential solutions, and we will be happy to expand those discussions to include other policymakers. At the same time, we want to make sure that whatever solutions are adopted to address this problem do not have unintended consequences."

"Most wireless carriers probably have some procedures in place already to limit harms to consumers whose mobile phones have been stolen or lost, but perhaps there are additional steps that could be taken,” said Jeff Silva, analyst at Medley Global Advisors. “It is an area worthy of further investigation and any pro-active measures that disincent black-market resale of devices, such as remote locking or Australia’s blacklisting program, could help. At the same time, a dose of humility is warranted insofar as acknowledging government sometimes can only do so much to alter human behavior on a grand scale.”

"This is a case when the congressional impulse to ‘do something’ certainly should be suppressed,” said Free State Foundation President Randolph May. “Wireless providers, handset manufacturers, operating system and apps developers all operate in competitive markets, and they have every incentive to respond, as best they can within the context of economic and technical constraints, to consumer demand for more theft-proof features. But I don’t want Congress designing or dictating cellphone technology or features.”

Less Government President Seton Motley agreed. “This is a completely private sector matter, save for law enforcement dealing with the thefts as they occur,” Motley said. “The federal government has absolutely no role to play here. ... The cell companies and their customers will consistently arrive at an ever-evolving best way to deal with this problem. The federal government inserting itself adds nothing -- save for impediments to and delays of the actual solutions the private sector will ... reach on its own.”

"This raises interesting questions because steps carriers might take to help combat theft are also likely to raise other concerns around privacy or about possible abuse of things like tracking capabilities by law enforcement,” said Public Knowledge Legal Director Harold Feld. “It is also an example where you would like to get all the carriers and CE manufacturers on the same page, but not in a way that raises competition concerns. For example, we wouldn’t want the carriers to get together and require something that might disadvantage competing services in the name of ’theft prevention.'"

The best response might be a multi-stakeholder inquiry, Feld said. “You would want to ask ‘What could carriers or CE manufacturers or app developers do consistent with our concerns about privacy and civil liberties? Are there any FCC rules that get in the way?'” he said. “'Does it need some kind of FCC oversight or blessing to address the competition concerns?’ A lot of times, it is useful to simply start a conversation and see where it goes. Having the FCC convene that conversation allows consumer advocates and others to participate in a way that is both positive and unlikely to occur spontaneously in a purely private sector conversation."

Information Technology Innovation Foundation Senior Fellow Richard Bennett said a few weeks after he lost his BlackBerry in London, he got a Yahoo mail from the new owner complaining about all the email he was getting under Bennett’s account. “There was nothing I could do about the fact that this person had my phone,” he said. “Tracking stolen cellphones doesn’t violate anyone’s privacy but the thief’s or the thief’s customers. We should have a system where reporting cellphone theft to the police would result in the phone being tracked down and the thief arrested. We can protect due process by requiring proof of purchase and penalizing those who make malicious complaints. Locking out personal information should be a part of this process at the user’s discretion."

"I have wondered why the carriers haven’t implemented lockouts and blacklists for stolen phones, if only because one would think that they would sell more phones that way,” said Andrew Schwartzman, senior vice president of the Media Access Project.

Sprint Nextel takes cellphone theft “seriously” and will work with Congress, the FCC and law enforcement, a company spokeswoman said. Sprint places “strict usage restrictions on phones when they are reported lost or stolen, and [monitors] such accounts for fraudulent and irregular use,” she said. Sprint deactivates devices when they are reported lost or stolen and gives customers the ability to “password protect their devices and remotely find, lock, and remove data on certain lost or stolen devices,” she said.

"Verizon Wireless has a long-standing commitment to protect our customers if their mobile device is stolen,” a company spokesman said. “We maintain an internal system that does not allow devices reported as stolen to be activated on the Verizon Wireless network. We also support the development of broader, industry-wide solutions that work with other providers, as well as device manufacturers, applications and software developers, to increase consumer protections. Also, consumers have other resources they can utilize, such as downloadable security applications, to help ensure their stolen devices cannot be used or accessed illegally."

"Consumer safety is a top priority for AT&T and we take very seriously the theft of wireless devices,” a spokeswoman said. “As Co-Chair of the North American Fraud Forum and Security Group of the GSM Association, AT&T has been actively exploring an international industry-wide solution to permanently disable stolen devices on all networks. We are also currently working with other North American wireless carriers, phone manufacturers, and OS providers to identify the most comprehensive, technically feasible and expeditious solution to address this important issue. We hope to be able to participate in an industry-wide solution soon."