The Federal Communications Commission (FCC) has changed a long-standing rule that required unlocking of mobile phones on Verizon 60 days after activation, after reports of fraud. It notes that Verizon’s unlocked handsets are often stolen and resold for premium prices on the dark web. The fraud surrounding this is apparently costing the company millions of dollars annually.
FCC revises Verizon’s phone unlocking rule after reports of fraud
The FCC opines that this update “closes a loophole that sophisticated criminal networks and lawbreakers have exploited in illicit activity.” Criminals sold these phones at a premium on the dark web, especially in countries like Russia, China, and Cuba. Verizon sought this change last year. The carrier told the FCC that device fraud and trafficking are significantly growing problems and “organized globally through connected criminal networks.”
Verizon reportedly alleged that this fraud has cost the company an estimated 784,703 devices to fraud across both prepaid and postpaid offerings in 2023. This also led to the company losing millions of dollars annually.
This cost the company millions of dollars
Wireless carriers typically unlock postpaid mobile phones after customers pay them off, and prepaid phones after a year of their initial activation. However, Verizon is the only exception, where the FCC requires it to unlock its mobile phones 60 days after activation. This is way earlier than standard industry practice.
This evidently backfired for it, resulting in a spike in fraud activity of approximately 55% after TracFone moved from its earlier policy of a one-year lock-in period to Verizon’s 60-day lock as a condition of the FCC’s approval of the transaction.
FCC Chair Brendan Carr reportedly stated that criminal networks have exploited the FCC’s handset unlocking policies to facilitate criminal activities.
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