Article

'Kill Switch' legislation and the ecoATM

A federal bill aimed at curbing smartphone thefts could offer a boost to the device recycling-kiosk company.

February 17, 2014 by Natalie Gagliordi — Editor of KioskMarketplace.com, Networld Media Group

The Federal Communications Commission recently reported that one-third of thefts in the U.S. involve smartphones — and that figure rises to as much as one-half in most major cities. The reason that smartphones are such a hot target for thieves is simple. Smartphones tend to carry a high price in the black market, as data is easily wiped to restore the device to its factory settings.

But the newly proposed Smartphone Theft Prevention Act, a bill introduced by Democratic Senators Barbara Mikulski (Md.), Amy Klobuchar (Minn.), Richard Blumenthal (Conn.) and Mazie Hirono (Hawaii), aims to make it harder for criminals to use and resell stolen phones by requiring OEMs to install a "kill switch" on all devices sold in the U.S.

The feature would enable phone owners to remotely render their lost or stolen device useless, even if it is restored.

According to Sen. Klobuchar, founder of the bill, "Cellphone theft has become a big business for thieves looking to cash in on these devices and any valuable information they contain, costing consumers more than $30 billion every year and endangering countless theft victims. This legislation will help eliminate the incentives for criminals to target smartphones by empowering victims to take steps to keep their information private; protect their identity and finances; and render the phone inoperable to the thieves."

Beyond the consumer side of smartphone theft, the recycling kiosk ecoATM has long been plagued with problems surrounding stolen phones ending up inside one of company's more than 800 kiosks deployed across the country.

EcoATM founder and CMO Mark Bowles said that while the kill switch could create some minor friction for consumers and recyclers, it's well worth the benefit of curbing the problem of stolen phones.

"EcoATM supports the kill-switch technology approach because it has strong potential to solve the problem of mobile phone theft broadly and relatively quickly," Bowles said. "Stolen phones are a plague on the entire mobile phone recycling industry, and, of course, consumers who are victims of the crime."

The proposed federal law comes on the heels of a similar California bill which also advocates for a mandated kill switch. San Francisco District Attorney George Gascón spearheaded the effort in California, and worked closely with San Diego-based ecoATM during the crafting of the state legislation.

"George Gascon and his office have been very sensitive to the recycling industry as they pursued this kill-switch solution with phone OEMs," Bowles said. "They invited ecoATM and others from the recycling industry into the conversation from the beginning. George Gascon himself also recently participated in ecoATM's law-enforcement summit in San Diego with dozens of law-enforcement executives from around the U.S. there to discuss how to address the issue of mobile phone theft."

Legislation vs. technology

Bowles said that it is necessary to distinguish between kill-switch technologies and the kill-switch legislation. Apple, which represents a huge chunk of the smartphone market, has already implemented a type of kill switch in iOS7 without being required to by law. The iOS feature requires the seller to disconnect the device from their iCloud account before recycling the device; otherwise it has no value in the refurbishment channel, even though the phone is not stolen.

EcoATM has made a number of recommendations to Apple, Google and other mobile phone OEMs that they should include clear directions and steps on the phone for consumers to prepare their phones for resale, Bowles said. His team has advocated for a "Reset for Resale" button that would guide the seller and the buyer through the appropriate steps to ensure the device was in the proper state for reselling.

But not all parties involved are on board with the kill switch requirement. The cellular industry trade group CTIA recently spoke out against the bill. 

"While Senator Klobuchar and CTIA are of like mind when it comes to wanting to prevent the theft of wireless devices, we clearly disagree on how to accomplish that goal," Jot Carpenter, CTIA VP of government affairs, said in a statement. "Rather than impose technology mandates, a better approach would be to enact Senator Schumer's legislation to criminalize tampering with mobile device identifiers. This would build on the industry's efforts to create the stolen device databases, give law enforcement another tool to combat criminal behavior, and leave carriers, manufacturers and software developers free to create new, innovative loss and theft prevention tools for consumers who want them."

Yet even with industry push back, Bowles is confident that the legislation will mark a positive turn in the tides — as well as a offer a much-needed legitimacy boost for the ecoATM business.

"I think the kill switch is here to stay," Bowles said. "And while no one really likes unnecessary laws and regulations, as I understand the currently drafted legislation, it only requires that OEMs make the 'kill switch' feature available to consumers; it doesn't force consumers to make use of it."

Read more about recycling and vending kiosks.

Photo via flickr.