Cell Phone Trafficking & Cell Phone Hacking: A Risky Business

Cell Phone Trafficking: A Serious Crime

Thinking about getting involved in cell phone trafficking? If you buy prepaid wireless phones from stores or from other traffickers to hack or resell them, you could face life-damaging consequences. Phone traffickers can get caught by undercover investigators, get sued, and go to jail.

Report Suspicious Activity

Report traffickers anonymously by email or to TracFone’s Toll-Free Fraud Hotline:

(866) 806-1838
TracFone.Security@TracFone.com

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What is cell phone trafficking?

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.

The Issue

Cell Phone Hacking: A Risky Business

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.

Court Cases

Since 2005, wireless service providers have filed 230 lawsuits against more than 680 traffickers in federal courts nationwide, resulting in damages awards totaling more than $800 million.

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Jail Time

Cell phone trafficking is a crime that has landed many defendants in jail.

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How Cell Phone Trafficking Works

Summary

How It Works

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.

Step One

Runners Buy or Steal Phones in Bulk

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.

Step Two

Middlemen Hack Cell Phones

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.

Step Three

Unlocked Cell Phones are Repackaged

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.

Step Four

Counterfeit Phones are Resold

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.

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Cell Phone Trafficking Harms Everyone

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.

Harms U.S. Cell Phone Industry

Cell phone traffickers have cost the American cell phone industry as much as $1 billion in lost investment that was intended to benefit legitimate U.S. consumers.

Increases Prices & Cheats Consumers Worldwide

Losses lead to increased pricing, making everyone pay for traffickers’ crimes and unsuspecting consumers, worldwide, purchase the hacked gray market devices without a warranty.

Abets Illegal & Fraudulent Schemes

Cell phone traffickers sometimes rob stores and individuals at gun point, steal identities and credit cards, and use other illegal schemes to get bulk quantities of cell phones.

Funds Criminal Activity

The profits from gray market cell phone trafficking have been known to fund terrorism and other illegal activities.

Know the Risks

Cell Phone Trafficking in the News

Read our coverage about cell phone trafficking and what law enforcement and the wireless industry are doing to combat this global issue.

September 8, 2016

Man arrested in Rochelle Park was running scam to get cell phones, cops say.