Flying under the radar is a complex network of traffickers. They don’t deal in guns or drugs. Instead, they deal in prepaid, unlocked cell phones for use on networks for which the phones were not intended. Traffickers buy discounted cell phones in bulk and steal subsidies from wireless carriers. The offenders then unlock the phones or hack into the proprietary software, a process also known as cell phone jailbreaking, so the phones can be reflashed and used on any wireless network. Traffickers also use armed robbery, burglary, identity theft, and all sorts of illegal conduct and fraudulent schemes to get their hands on cell phones.
Gray market traffickers resell phones to consumers at a considerable profit. Unsuspecting customers in the United States and around the world buy these “new” mobile phones that are often resold in counterfeit cell phone packaging. Traffickers profit by stealing the financial incentives (in the form of subsidies, rebates, leases, and installment billing discounts) that were supposed to benefit legitimate consumers.
You may think that buying phones in bulk, jailbreaking or unlocking cell phones, and selling them for profit is harmless. But cell phone trafficking not only hurts consumers and wireless providers, it also promotes street crime, armed robberies, and other illegal activity traffickers use to obtain phones put everyone at risk. Reflashed cell phones are often sold to dangerous people who use them to carry out heinous crimes. Gray market cell phone trafficking profits have been known to fund terrorism. Unauthorized hacking or resale of prepaid cell phones can also result in jail time for you.
Cell phone trafficking networks are comprised of individuals and companies located all over the world. They steal subsidies and other financial incentives from wireless carriers in the U.S., buying low cost cell phones and hacking into the proprietary software so the phones can be used on any wireless network. Trafficked cell phones are resold to consumers at a considerable profit for the traffickers. Here’s what a typical cell phone trafficking network looks like.
Some cell phone trafficking schemes involve groups of “runners” who buy prepaid bulk iPhones and other mobile phone models at discounts from retailers. They travel from store to store and buy the maximum allowable amount of prepaid cell phones at each stop, before moving along to the next one. Other runners commit armed robberies, burglaries, and other fraudulent or illegal schemes to obtain phones. The runners then resell these phones in bulk to middlemen.
Phone resellers or “middlemen” buy phones in bulk from runners, remove cell phones from their packaging and often unlock, reflash or jailbreak phones to be resold to consumers. Resellers do this by hacking into each phone’s proprietary software. This reflashing process allows the cell phones to operate on any wireless network.
Resellers take the unlocked cell phones and repackage them in counterfeit packaging to to look like brand new OEM phones. Repackaged cell phones are often placed in counterfeit packaging with a phone charger, counterfeit batteries, manuals, warranties, and other materials you would typically find in a newly-packaged phones.
The refreshed and repackaged cell phones are then sold to unknowing consumers who later find that they don’t work as intended, and that the warranties are no good. Because each hacked cell phone is made to look brand new, the buyer is deceived into thinking their counterfeit phone is actually the real deal.
Cell phone hacking and trafficking doesn’t just affect U.S. wireless carriers. All around the world, people pay for cell phone trafficking in a variety of ways.
Read our coverage about cell phone trafficking and what law enforcement and the wireless industry are doing to combat this global issue.