The Booming Black Market For Stolen Smartphones

It is no secret: the smartphone industry is booming. But as the number of users rise to one-third of the world’s population, so rises the number of smartphones stolen and traded on the black market.

It is a multibillion dollar industry growing increasingly complicated as security analysts look for answers and black market entrepreneurs work to stay ahead of the curve.

Here & Now’s Lisa Mullins spoke with journalist Matthew Shaer, who said that while Americans are aware of individual smartphone theft, often called “apple-picking,” they are less informed about larger scale operations, which can be even more profitable.

According to Shaer, there are two major other categories. In the first, known as a “smash and grab,” thieves take whole packages of not-yet-activated phones from vendors.

“Those smartphones, because they haven’t been activated yet are worth an incredible amount of money, especially if they can be shipped overseas,” Shaer said.

The second — called “credit muling” — is more complicated. Thieves pay residents of homeless shelters or halfway houses cash to sign up for a smartphone and then hand it over. Through hundreds of these transactions, each of which ruined the credit of the “mule,” one Sacramento couple was pulling in $2.5 million per year, Shaer said.

Anti-theft technology installed in new smartphones, such as the “kill switch,” has reduced theft by up to 30 percent in some areas. But these updates mostly affect “apple picking,” rather than “smash and grab” or “credit muling.” In fact, according to Shaer, there’s been an increase in the other two types, which is why he’s not encouraged by new legislation that will require all smartphone manufacturers to install anti-theft measures by mid-2015.

“You make it harder for people to steal phones one way,” he said, “they’re just going to steal them another way.”

• WIRED: The Secret World of Stolen Smartphones, Where Business Is Booming

Guest

• Matthew Shaer, journalist who has written for GQ, New York Magazine, Harper’s, and more. He tweets @matthewshaer.

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