By David Shepardson
WASHINGTON, Jan 12 (Reuters) – The Federal Communications Commission revised a long-standing rule that required Verizon Communications to unlock its mobile phones 60 days after activation, which it said is costing the telecommunications company hundreds of millions of dollars annually due to fraud.
The FCC said the action “closes a loophole that sophisticated criminal networks and everyday lawbreakers alike have exploited to engage in illicit activity.” It added that Verizon’s unlocked handsets are often stolen and resold for premium prices on the dark web, particularly in countries like Russia, China, and Cuba.
Verizon, which sought the change last year, told the FCC that device fraud and trafficking is a large and growing problem and “organized globally through connected criminal networks.”
Verizon told the FCC that this has culminated in it losing an estimated 784,703 devices to fraud across both prepaid and postpaid offerings in 2023, costing it hundreds of millions of dollars.
Wireless carriers previously agreed to unlock postpaid mobile phones, also known as handsets, after they are paid in full and a prepaid phone no later than one year after initial activation, the FCC said.
The FCC said Verizon is the only major provider that the FCC requires to unlock its mobile phones 60 days after activation, which is earlier than standard industry practice. Verizon said that it “saw a spike in fraud of approximately 55% after TracFone moved from its earlier policy of a one-year lock to Verizon’s 60-day lock” as a condition of the FCC’s approval of the transaction.
FCC Chair Brendan Carr said that sophisticated criminal networks have exploited the FCC’s handset unlocking policies to carry out criminal acts—including drug running and human smuggling.
(Reporting by David Shepardson in Washington;)
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