Verizon has started implementing its new policy of locking new phones for 60 days after purchase in an effort to combat handset-related fraud.
The Federal Communication Commission gave Verizon the greenlight in June for a 60-day phone lock period, agreeing that the safety check period wouldn’t significantly impact legitimate customers. A July postpaid competition report from Wave7 Research noted Verizon updated its device locking policy page on July 19, and implemented the policy at national retail on July 23.
The 60-day device lock aims to reduce the incentive for handset-related theft and fraud, and means Verizon customers can’t use a new device on a different carrier’s network for about two months after purchase or activation. After 60 days Verizon will automatically unlock the phone, regardless of whether the device is fully paid off.
Verizon previously told the FCC that selling unlocked phones facilitated, and maybe even encouraged, increasing incidents of device and identity theft, which negatively impacted both the carrier and its customers. The thinking is that phones that can only work on single carrier’s network (locked) for a period are not as valuable on the black market and so not as appealing to fraudsters.
Jeffrey Moore, principal at Wave7 Research, indicated there are real device-related fraud issues at national retail stores, such as people using fake IDs at stores like Walmart and Target to buy expensive devices like iPhones on equipment installment plans (EIP) and then resell them abroad.
Moore told FierceWireless that while some cynics might accuse Verizon of trying to reduce churn, he would disagree.
“I think Verizon is addressing a very legitimate concern,” Moore said.
According to Verizon, handset fraud cost the company about $190 million in 2018, during which it lost nearly 210,000 devices. In January of this year alone, Verizon said handset fraud cost the company $34 million, a 93% jump from January 2018. Identity theft also impacted 7,000 Verizon customers per month on average in 2018, up 46% from 2017.
Verizon needed the FCC to grant a partial waiver to allow phone locking because the carrier is subject to so-called C-Block rules as a licensee of the 700 MHz C bock, spectrum it initially used for LTE services. C-block rules were put in place in 2007 and prohibit licensees from disabling phone features including preventing consumer from using handsets on other providers’ networks via device locking.
Verizon is the only major carrier subject to these rules and before the waiver, was the only large carrier selling unlocked phones at the time of purchase.
“Even with these safeguards in place, Verizon will still have the most consumer-friendly unlocking policy in the industry and we see very little impact on our legitimate customers’ ability to use their devices,” said Ronan Dunne, EVP and group CEO of Verizon Consumer Group, in a statement when the FCC waiver was granted.
The other three national carriers, T-Mobile, AT&T, and Sprint all keep phones locked for a certain period after purchase and all require the device be paid off in full in order to be unlocked. Some policies vary for prepaid and postpaid customers. T-Mobile requires that a device be active on its network for at least 40 days in order to unlock, AT&T postpaid customers need 60 days of active service, and Sprint has a minimum of 50 days.