The Industry

Dear Apple: Good Luck Against The Smartphone Black Market

fromWNYC

Apple's fingerprint technology is an effort to combat smartphone theft. i i

hide captionApple's fingerprint technology is an effort to combat smartphone theft.

Ng Han Guan/AP
Apple's fingerprint technology is an effort to combat smartphone theft.

Apple's fingerprint technology is an effort to combat smartphone theft.

Ng Han Guan/AP

Last week, Apple introduced two new iPhones with new features, including fingerprint recognition on one model, and extra password protections. But the new technology is up against a sophisticated black market that has had years to grow and adapt to meet the world's desire for smartphones.

To call smartphone-related crime an epidemic is not an exaggeration. By one estimate, more than 4,000 phones are stolen every day in the United States.

Last year the crime rate in New York City rose after years of declines. The reason? Fifteen thousand people reported a stolen phone.

Jessica Ingle was one; her phone was stolen in a crowded bar. "I didn't even notice it," she says. "They must be experienced or something at doing it without people noticing."

Pick Up The Phone

Over the summer, I spent a day driving around Brooklyn, hitting up places that advertise on Craigslist saying, "We buy used iPhones."

I brought an iPhone 4 I borrowed from my co-worker, which she had wiped.

Over the phone, a buyer named John agreed to meet me on the street in a rundown part of town.

John spotted me right away. We shook hands, and he took me inside a beauty parlor, where women sat underneath hair dryers. They hardly looked up from their magazines as John introduced me to his business partner. This guy picked up the phone, flicked through several screens, and said, "How much do you want for it?"

I didn't sell it.

I'll just say it: It didn't seem to me like these guys were too concerned where the phone came from. They also seemed pretty confident after looking at a phone that had been wiped that they would be able to sell it on, no problem.

— Ilya Marritz, WNYC

The weird thing, Ingle says, is that the thief actually left her wallet in her handbag. Only the phone was missing; it was never found.

Officers are doing their best to fight crime, says Pat Timlin, a former deputy commissioner in the New York City Police Department. But the odds are against them. Smartphones are easy to grab, he says, and they're almost as liquid as cash.

Tracking The Black Market

An insatiable appetite for smartphones has turned the black market into a global enterprise, efficiently sending ill-gotten gadgets wherever demand is greatest.

But no one has a complete picture of the size or scope of the black market. One can only catch it in glimpses.

In a report for NYPD, Timlin found stolen phones changing hands all over the city. "We saw bodegas, we saw local laundromats, and we saw back-alley sales," he says.

In March, the California attorney general announced the arrests of two individuals who allegedly paid homeless people to buy discounted phones on a two-year contract, and then shipped the devices in bulk to Hong Kong.

There, phones can sell for $2,000 each — 10 times as much as in the states. The accused allegedly took in almost $4 million in less than a year.

Larger Than Thefts

"I hate the guys who do this type of stuff," says Marc Rogers of the online security firm Lookout. He is a hacker who frequents forums where information on the black market for cellphones is exchanged. He says that in the global game of cat and mouse, the mouse is usually faster.

For example, some European authorities created blacklists, where users could report stolen phones and block them from being used again on other networks. But Rogers says criminals quickly realized that by shipping devices to foreign countries, they could sidestep the blacklists and probably sell for close to retail price.

Law enforcement tends to focus on thefts on the street and in subways. But Rogers believes police will only make progress when the black market itself is squeezed.

He says the security features in Apple's new operating system, like fingerprint ID and the requirement that you enter a password before resetting the phone, are a good start.

"Ultimately, it would be fantastic if we could get it set up so once a device is stolen, the only value there is from the parts," he says.

New York police will be on high alert when Apple's new iPhone goes on sale Friday. Since the first iPhone debuted six years ago, they've noticed that every new Apple product comes with a spike in street crime.

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