Verizon, the US telco, has asked its regulator, the FCC, for a rule change that will allow it to lock newly sold 4G handsets to its own network for the first 60 days post sale.
In the application to the Federal Communications Commission, Verizon argues that this will better protect its customers and itself from identity theft and related forms of handset
fraud — large and growing problems that significantly harm legitimate customers who are the primary victims of these crimes.
The filing states:
Handset fraud was minimal in 2015, began to ramp up in 2016, and has grown significantly both in 2017 and 2018. Our data indicate that Verizon lost approximately 210,000 devices in 2018, up from a loss of approximately 155,000 devices in 2017. Verizon estimates that handset fraud cost nearly $190 million in 2018, up from approximately $115 million in 2017. Verizon’s data further indicate that the number of consumers adversely affected by identity theft has increased from an average of 4800 per month in 2017 to approximately 7000 per month in 2018, an increase of 46% year over year. These trends continue, as handset fraud cost Verizon $34 million in January 2019, a 93% increase over January 2018.
The rules for the radio spectrum that Verizon uses means they are prevented from locking 4G handsets even though the other big US mobile networks (T‑Mobile, Sprint and AT&T) all lock their handsets for a period.
Every other large U.S. wireless carrier has continued to lock 4G LTE handsets at the time of purchase, at least in part to help prevent this type of fraud and identity theft. Neither Sprint, T‑Mobile, nor AT&T provides 4G LTE handsets unlocked at the time of purchase as Verizon does.
Verizon’s argument is that criminals are using the identity of victims to obtain expensive new handsets which are immediately resold, possibly in a foreign country. This type of fraud shows signs of increasing and they want to restrict the customer’s freedom to switch the handset to an alternative network on the basis that not many genuine customers switch during the first 60 days. The phone would only be unlocked following the receipt of payment from the customer – an indication that the purchase was genuine.